Engineering news
It was the third consecutive month of decline, and there has been a 2.9% drop in output compared to this time last year. However, it is still the second highest performance for the industry for 12 years.
The vast majority - 78.9% - of the cars built in the first six months of this year were for the export market, with demand from British consumers falling by 9.5%.
That has sparked fears of a Brexit induced industry crisis. The SMMT’s analysis suggests that failing to secure a deal, or even an interim status quo arrangement on leaving the European Union could cause output to fall in 2019.
Supply chain disruption caused by hard border controls and WTO tariffs if the UK leaves the customs union could cause a 10% hit to production, they say.
SMMT chief executive Mike Hawes said the UK automotive industry had been a global success story, and urged the government to provide clarity on the future. “At the heart of this has been the free and frictionless trade we’ve enjoyed with the EU – by far our biggest customer and supplier,” he continued. “But Brexit uncertainty is not helping investment and growth is stalling.”
Tony Burke, assistant general secretary for manufacturing at trade union Unite said the figures were a warning sign for the government. “The Brexit effect is now real and is biting into an important UK manufacturing sector, our world-class car industry,” he said.
“Government must hear the alarm bells ringing and take action. Not only are consumers shying away from buying cars because of the massive economic uncertainty we are in, the industry is also putting a brake on investment until they hear from government that our existing friction-free trading arrangements will be secure once we are out of the European Union.”
Hawes also urged the government to provide clarity. “The government has been in “listening” mode but now it must put on the table the concrete plans that will assure the future competitiveness of the sector,” he said. “Investors need certainty so, at the very least, the UK must seek an interim deal which maintains single market and customs union membership until we have in place the complex new agreement sought with the EU.”
Burke went further. “We urge the government to give our industry and this workforce a chance,” he said. “Stop ruling out single market access and a customs union because this is destroying investor confidence.
“Get behind UK workers and provide our world class auto sector with the security and certainty they need to stay world-beating.”
A spokesperson for the Department for Exiting the European Union said: "The government's industrial strategy makes clear that we want to build on our strengths in advanced manufacturing in this sector. Nissan's decision to continue its investment in Sunderland and plans by Jaguar Land Rover to double its output here are clear votes of confidence in our automotive industry.”