UK car production fell 20.1% last month on the back of supply chain shortages but a surge in EVs brightened the outlook.

The total output of 68,790 units marked the weakest January since 2009

The total output of 68,790 units marked the weakest January since 2009 and was down by 17,262 units against the same month last year, which itself was one of the worst Januarys on record. Production for both overseas and domestic markets both fell, by 17.5% and 30.8% respectively.

While the ongoing worldwide shortage of semiconductors was the biggest cause according to the Society of Motor Manufacturers and Traders (SMMT), volume was also lost through the closure of Honda’s Swindon plant in July 2021 and production downturns from model changeovers.

Battery electric vehicle uptake however provided some more positive news, with production up 37.6% to 6,326 units – accounting for one in 11 cars produced. With plug-in hybrids and hybrids factored in, electrified vehicles were responsible for more than a quarter of output (27.4%, up from 25.4% in 2021).

As a result of a “challenging” start to the year, independent expectations for UK car production have been revised 2.4% down from the autumn outlook to approximately 979,000 units for 2022. This would still be a 14.4% increase on 2021’s output – despite the loss of Honda and some car production facilities switching to LCV production – and largely due to a positive outlook for EV production, following confirmations from several manufacturers to expand EV production in the UK.

Longer term, car production is expected to exceed one million units from 2023 onwards, and surpass 1.1 million in 2027.

Mike Hawes, SMMT chief executive, said that while the UK automotive manufacturing industry had seen another torrid start to the year, the sector was fundamentally strong and recent investment announcements showed the potential for growth, not least in terms of rising EV production.

“Long-term recovery can only be delivered, however, if global competitiveness is assured and for that we must address both inflationary and fixed costs, most obviously escalating energy prices, but also fiscal and trading costs. Every measure must be taken if we are to secure a bright, electrified future for our world-class automotive manufacturing base and the high-skilled, high-value jobs it creates across Britain,” he added.

Richard Peberdy, UK head of automotive at KPMG, commented: “The start of 2022 has certainly provided carmakers with more confidence than this time last year in the industry’s ability to avoid paused production lines, closed showrooms and staff isolating. But they will be pondering whether the cost of living squeeze, which includes rising fuel prices and energy costs, begins to slow the demand that currently outpaces supply.

“Manufacturers are also coming under their own inflationary pressures, with the challenge of how to absorb those, or pass them on to already squeezed consumers.

“The industry also faces the familiar challenge in the year ahead of ensuring the next generation of skilled employees is coming through.”