UK Car Production Booms
Figures released by the SMNT have revealed the British car manufacturing industry is continuing to enjoy a boom
With the best performance since the financial crisis of 2008; If current trends continue, the industry will soon surpass the records set by the old British Leyland-dominated industry in the 1970s and 1980s.
Figures for car manufacturing in the UK in August show an incredible 40% rise over the same month last year. This result was key in lifting car production figures for 2015 to 1,011,127 in the year to the end of August, a figure that is 1.6% up on 2014 at this point in the year. This represents the continuation of an impressive period of growth in the industry which now stretches back for more than three years. It is a stunning achievement against a background of sluggish growth or decline elsewhere in the world, including the key European markets of France, Germany and Italy.
One key to this trend-busting performance is in the nature of the cars that are being produced now in the UK. These include prestige marques such as Bentley, Rolls-Royce, Jaguar and Land Rover. These cars have managed to maintain strong demand, whereas most of the mass-market brands have been affected by the financial crisis. These cars are also very popular in emerging markets - particularly China, which is now the major market for some of these brands, topping even the domestic UK market. That is not to say that the UK’s mass-market car-makers have been found wanting. The performance of the Nissan plant at Sunderland has been particularly impressive. They recently set a new record by producing 500,000 examples of a new model (the Qashqai) in just 21 months, and this has been rewarded by Nissan investing a further £100 million at the plant in order to tool it up for producing new models. The UK government has also agreed to pump in millions of pounds to support the upskilling of the workforce at the Sunderland plant in order to make it more capable of securing international orders from its parent firm, Nissan.
The dramatic 40% spike in August production is not altogether a surprise. The SMMT says that the numbers are skewed by downtime at car factories, which traditionally used the quieter summer months to close down and complete maintenance and retooling tasks. A lot of this happened during last August, which caused a dip in production numbers for this month last year. This year, most of this type of work appears to have been completed in July or postponed for later in the year, leaving UK car factories to race ahead and produce a record number of cars.
The one cloud on the horizon appears to be the scandal emerging at VW. The company has admitted that it deliberately fitted software to its diesel cars in the US to allow them to falsely achieve the lower emissions figures demanded in the US. Around 500,000 cars have already been recalled in the US, and VW has set aside billions of dollars to pay for this exercise. The true cost, however, could get much bigger, as VW has admitted that 11 million cars were fitted with the device. VW's chief executive, Martin Winterkorn, has already resigned as a result of the scandal, and the industry is afraid that other car-makers could be implicated. More than 30% has already been wiped off the value of VW shares in just a few days, and similar falls elsewhere in the industry could be disastrous for smaller car-makers without the deep pockets of VW. So far, however, no other car-maker has been implicated in the scandal and no other manufacturer has admitted to the practice of fooling the emissions tests. If the UK manufacturers emerge unscathed, the fantastic production figures we are seeing now may just receive a small boost from disaffected customers turning away from VW models.