UK car production hits lowest level in more than half a century

A report by the Society of Motor Manufacturers and Traders (SMMT) said UK car production in 2022 shrunk to levels not seen since the 1950s.

In 2022, a total of 775,014 cars were built in the country. The figure constitutes a 9.8 per cent decline from the 859,575 made during the previous year.

December rounded off a volatile 12 months, with output down 17.9 per cent year on year, despite the growth that had occurred in October and November.

The annual total for 2022 was 40.5 per cent down on pre-pandemic levels.

The columns for the UK last year were up 9.4 per cent compared with 2021, but this failed to offset a 14 per cent decline in exports, with four out of five UK-built cars shipped overseas, the figures showed.

"These figures reflect just how tough 2022 was for UK car manufacturing," said Mike Hawes, chief executive of the SMMT.

The industry body explained these figures are a result of the global chip shortage that has limited the ability of car makers to build vehicles in line with demand.

Over the past two years, the chip shortage has forced Ford, Jaguar Land Rover, Volkswagen, General Motors, Nissan, Daimler, BMW, Renault and Toyota to shut factories, scale back production or exclude high-end features such as integrated satellite navigation systems, which rely on sophisticated semiconductor technology.

In addition to the semiconductor shortage, the SMMT said the 2022 figures reflect the closure of Honda's factory in Swindon in July 2021 and the decision by Stellantis to stop producing the Vauxhall Astra in Ellesmere Port in April 2022 as part of plans to repurpose the factory to make electric vans.

Despite these factory closures, the SMMT also pointed out that 2022 saw record levels of electric vehicles (EV) produced, with almost a third of all cars made fully electric or hybrid.

They were worth £10bn in exports alone, according to the SMMT.

"The potential for this sector to deliver economic growth by building more of these zero-emission models is self-evident; however, we must make the right decisions now," said Hawes.

"This means shaping a strategy to drive rapid upscaling of UK battery production and the shift to electric vehicles based on the UK automotive sector's fundamental strengths – a highly skilled and flexible workforce, engineering excellence, technical innovation and productivity levels that are among the best in Europe."

Suzanna Hinson, Lead of Battery Workstreams at the Green Finance Institute's Transport Team, said "The UK has potential to become a leader in global car production. However, this is a very narrow window of opportunity, if we miss it, we're likely to see a continuation of this trend as manufacturers continue to move towards electric product lines but don't see the benefits of keeping manufacturing in the UK.

"Decarbonising road transport is absolutely vital to reaching net zero targets – but to do so, we must unite industry players, the public and private sectors to overcome the barriers to investment in the UK's car industry and put the UK back on the map for car production."

Last year, the UK government announced that it would bring forward a ban on the sales of new petrol and diesel cars and vans in the country to 2030, although the restriction will not affect hybrid vehicles.

However, the new motor tax that EV drivers will face from April 2025, and the collapse of EV battery start-up Britishvolt, have raised doubts regarding the robustness of the sector.

"We are determined to ensure the UK remains one of the best locations in the world for automotive manufacturing," a government spokesperson said.

"Our success is evidenced by the £1bn investment in Sunderland in 2021, and we are building on this through a major investment programme to electrify our supply chain and create jobs."

Since the silicon chip shortage began in 2020, the economic losses caused by the lack of semiconductors can be measured in billions of dollars.