Glimmer of electric light brightens 'dismal' year as car production falls to worst level since 1956 Suez Crisis

By Ray Massey

Record electric car production and ‘unleashed’ new investment provided a welcome glimmer of light among the gloom and a ‘vote of global confidence in the UK’ ?as overall car production fell last year to its lowest level since the Suez Crisis of 1956.

?Total UK car production in 2021 fell?by 6.7% to just 859,575 vehicles, according to the latest?figures released by the Society of Motor Manufacturers and Traders (SMMT).

The effects of the Coronavirus pandemic and a knock-on global shortage of vital microchips needed in all modern cars were blamed mainly for the production drop, though the closure of Honda’s Swindon factory in July accounted for a quarter of the fall.

Last year’s output was 61,353 less than 2020, which was itself adversely affected by coronavirus lockdowns, and 34.0% below pre-pandemic 2019.

But despite the ‘dismal’ year there were also ‘grounds for optimism’ in 2022 with a potential ￡4.9billion of investment announced and forecasts of production recovery ‘with Brexit uncertainty largely overcome.’

This does not include the ￡2.5billion announced on Wednesday by Bentley.

?UK factories turned out almost a quarter of a million (224,011) ‘electrified’ zero and ultra-low emission vehicles – comprising fully electric battery electric vehicles (BEVs), plug in hybrid vehicles (PHEVs), and self-charging hybrids (HEVs) -?a record feat and a rise of 29.6% to?represent more than one-in-four (26.1%) of all cars made last year.

The shift to ‘electrified’ vehicle manufacture?saw record production of fully-electric battery electric vehicles (BEVs) which surged by?72.0%, while hybrids rose 16.4%, as the UK industry and car market heads towards a ‘green’ future, with the Government outlawing sales of new petrol and diesel cars from 2030.

Looking ahead, the latest independent production outlook for 2022 forecasts UK car production to increase to more than one million units, representing a 19.7% increase?on the 2021 total, despite the loss of production in Swindon.

The SMMT said: ‘With favourable conditions, including an end to the global chip shortage, new models coming on stream and the avoidance of additional trade barriers, car production could continue to climb and reach 1.1 million in 2025, with further growth beyond.’

?Global exports?were the ‘foundation’ for UK car manufacturing with eight-in-ten cars made here shipped overseas.

Biggest export models were: MINI; Toyota Corolla; Nissan Qashqai; Honda Civic; Nissan Juke; Range Rover Sport; Range Rover; Range Rover Evoque; MINI Clubman and Range Rover Velar.

Although export production for overseas markets declined by 5.8% to 705,826 units, volumes for the domestic UK market fell even more steeply, down 10.6% to 153,749.

?Post-Brexit, the European Union remained the UK’s largest market, increasing to 55.0% of exports, from 53.5%, and representing 388,249 units (-3.0% vs 2020). This was despite ‘frictions and costs’ arising from the new trading arrangements.

While automotive businesses were as well prepared as they could be, an SMMT member survey in April revealed some nine-in-ten (91%) firms were spending more time and resource managing UK/EU trade than in 2020.

?The SMMT said: ‘The overall poor performance can be attributed to several factors, most of them direct consequences of the pandemic.

‘Despite this, British car factories produced a record number of battery electric (BEV), plug-in hybrid (PHEV) and hybrid electric vehicles (HEV), turning out almost a quarter of a million (224,011) of these zero and ultra-low emission vehicles, representing more than one-in-four (26.1%) of all cars made. ‘

?The SMMT explained: ‘The shortage of semiconductors, a critical component in modern car manufacturing, was the principal cause of the decline, with factories having to reduce or even pause production while awaiting parts whose supply has been heavily constrained by the global pandemic.

?It added: ‘Manufacturers also wrestled with staff shortages arising from the need to self-isolate and depressed demand with car showrooms closed for months due to lockdowns and despite the success of ‘click and collect’ services.’

?The ‘most notable’ non-Covid issue behind this fall, was the closure of Honda’s Swindon factory in UK car plant in July ‘which accounted for around a quarter of the annual decline’, said the SMMT.

Shipments to the US, the?second?biggest export market, were down 10.5% and Japan (ranked 4th) down 36.1%.

But third place China fared better, with exports up 0.6% to 57,356 units, reflecting ‘strong market conditions’ and ‘demand for iconic British performance, luxury and premium car brands’ such as Bentley and Rolls-Royce.

?Exports to Canada, Australia and South Korea?fell by 5.3%, 31.1% and 29.7% respectively.

?There was ‘increased confidence’ from avoidance of a Brexit ‘no deal’ and the signing of the Trade and Cooperation Agreement (TCA) which elped spur publically announced investment for the industry to?a potential ￡4.9 billion in 2021, the highest total since 2013.

?This included vital investment announcements in Vauxhall’s Ellesmere Port and Halewood plants, Lotus in Norfolk, Nissan Sunderland and Gordon Murray Automotive in Surrey.

The SMMT added: ‘A significant proportion of the announced investments was in support of electrified vehicles, with the expansion of existing facilities in the North-East and the proposed development of a new battery gigafactory in the West Midlands.’

With around half (￡2.5 billion) of the total investment sum resting on the the SMMT stressed: ‘Realising such investments will be vital as the UK automotive manufacturing sector is expected to need at least 60 GWh of gigafactory battery capacity by 2030 if it is to remain globally competitive as trading requirements tighten. ‘

Investment in training and reskilling was also vital.

?SMMT chief executive Mike Hawes said 2021 had been ‘ another incredibly difficult year for UK car manufacturing, one of the worst since the Second World War.’

But he noted: ‘Despite this miserable year, there is optimism. With Brexit uncertainty largely overcome with the Trade and Cooperation (TCA) deal, investments have been unleashed, most of which will help transform the sector to its zero-emission future.’

?He said: ‘This is a vote of global confidence in the UK but must be matched by a commitment to our long-term competitiveness; support for the supply chain in overcoming parts shortages, help with skills and training and, most urgently, measures to mitigate the escalating energy costs which are threatening viability.’

The Suez Crisis of 1956 was sparked following the controversial invasion of Egypt in late 1956 by Israel, followed by the United Kingdom and France, to secure free passage for ships?through the Suez Canal following it nationalisation by Egyptian President Nasser.

It led to demand for smaller, more frugal fuel-efficient cars such as the BMW Isetta 'bubble car' and ultimately the MINI.