UK car production falls by 10% as industry calls for 'open trade links with Europe'

Reuters/Nigel Roddis

Car manufacturing activity in the UK fell by almost 10% in May, a significant change from the same month last year, according to new data from the Society of Motor Manufacturers and Traders (SMMT).

Production dropped by 9.7% to 136,119 vehicles last month. The biggest change was felt in domestic production, which fell by 8.1% in the year to date. The SMMT attributed the slowdown to production lines getting ready to produce new models.

The figures look starkly different to the industry's performance a year ago. Car production was at a ten-year high in May 2016, with a growth of more than 26%.

Exports have been the main driver of demand this year, and have increased 0.8% in the year to date, but are down by 9% in May.

May's figures follow even worse results in April, which saw a production drop of 18.2%. The SMMT put this down to the late Easter bank holiday, which resulted in there being fewer manufacturing days, and said manufacturing remained strong.

Despite a few bad months, car production remains relatively high, and saw a record performance in the first quarter of the year.

Here is the chart of production over time:

SMMTAlmost 80% of all cars manufactured in the UK are exported, and more than half go to Europe. The car industry has called for the UK to maintain unrestricted access to the single market following Brexit, which it says is integral to remaining competitive.

Mike Hawes, SMMT chief executive, says in a statement: "Global demand is strong and exports remain the driving force for British car production volumes in the UK. Maintaining our current open trade links with Europe, our biggest market, and further developing global markets is vital."

The SMMT has predicted that EU tariffs on cars alone could add at least £2.7 billion ($3.51 billion) to imports annually, and £1.8 billion ($2.34 billion) to exports.

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