Almost all car makers in the UK are having a hard time figuring out new trade rules post-Brexit, the Society of Motor Manufacturers and Traders (SMMT) said on Thursday, as it announced that UK car production rose for the first time in 18 months.
“Automotive businesses are working incredibly hard to maintain output, with some nine-in-ten (91%) firms spending more time and resource managing UK/EU trade than in 2020,” the body said.
More than a third (36%) are devoting more resources to ‘rest of the world’ trade.
The SMMT said that as UK automotive is export-led, maintaining free and fair trade with all nations is “crucial to its future prosperity.”
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Exports to the EU, US and Asia were all up in March, by 33.5%, 36.4% and 54.1% respectively.
Meanwhile, UK car production rose 46.6% in March, the first increase after 18 months of decline, with 115,498 cars manufactured, as lockdown restrictions ease.
It has been one year since the coronavirus crisis caused all UK automotive plants to be shut in mid-March 2020.
SMMT CEO Mike Hawes said: “With factories shut for much of March 2020, output [for March 2021] was always going to be up but it remains below average, with some £11bn worth of production lost over the past year.”
“Whilst the COVID situation is improving in the UK and in some major export markets, manufacturers are still struggling to manage residual issues, most notably the global semiconductor shortage.”
Six-in-10 (60%) large firms expect recovery to take at least six months, and a third of these said it will take at least two years.
“Instigating a successful recovery of UK automotive manufacturing will be critical to sustaining the 864,000 jobs that keep the broader industry going, jobs that are highly skilled and based in every region of the UK,” SMMT said.
The turnaround is projected to begin this year, with the sector forecast to produce more than 1 million units. This would mean around 130,000 more vehicles than in 2020, when the pandemic saw production fall to its lowest level since 1984.
Electric vehicles made up 21.5% share of all cars produced, up from 13.7% a year before, meaning one-in-five-cars produced in the UK is now alternatively fuelled.
“The shift towards electrified vehicle production is fundamental to the future of this vital sector,” said Hawes.
He added that securing investment for this will depend on the global competitiveness of the industry.
“Companies are already having to absorb additional costs arising from our new trading arrangements with the EU, but must also invest in new technologies, new processes and upskilling the workforce,” he said.