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UK car manufacturing rose by 39.8% in September with 88,230 vehicles leaving British factory lines – 25,105 more than the same month last year, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT).
It means September is a triple success for the sector, with it being the strongest month of growth in 2023, the best September since 2020, and UK car making now reaching 659,901 units year to date – some 14.9% above the same period in 2022.
Output increased for both domestic and export markets, with production for the UK up 65.9% to 23,503 units and overseas shipments rising 32.2% to 64,727 units.
Given the increasing importance of EV trade with mainland Europe in particular – bilateral trade which has more than doubled in value in the last three years – SMMT said the tariff-free trade set out in the UK-EU Trade Cooperation Agreement (TCA) must be maintained.
From January 2024 tougher rules of origin for batteries come into force. Given the value of batteries to the total cost of an EV, SMMT said the rule changes threaten the competitiveness of both UK exports to the EU and EU imports to the UK market.
The trade association said failure to comply will result in a 10% tariff which if fully passed on would raise the average cost of UK-built battery electric vehicles (BEVs) by £3,600 in Europe, while EU-made BEVs sold in the UK would see an average £3,400 price hike.
It added that a three-year delay to the implementation of these new requirements would maintain competitiveness, supporting British and European manufacturers, and is readily achievable through the existing TCA framework with no need for formal renegotiation.
“A particularly strong period of car making is good news for the UK, given the thousands of jobs and billions of pounds of investment that depend on the sector,” said Mike Hawes, SMMT chief executive.
“With countries around the world shifting to zero-emission motoring, Britain is well placed to be a global EV manufacturing hub if the investment and trading conditions are right. Given the increasing importance of electrified car production, the first and urgent step is for the UK and EU to agree to delay the tougher rules of origin requirements that are due imminently.
“This would give the necessary breathing space for automotive sectors on both sides of the Channel to scale up gigafactories and green supply chains, both of which are essential for a stable, long-term transition.”
Lisa Watson, director of sales at Close Brothers Motor Finance, commented: “Whilst the economic and political landscape remains uncertain, a significant rise in production levels shows manufacturing has remained resilient.”
“The government’s five-year delay of the initial 2030 ban on new petrol and diesel vehicles may have put some manufacturers in a challenging position, and navigating changes in legislation and consumer demand means many will have to adapt their plans to keep the UK’s automotive output on track to return to pre-pandemic levels.
“Manufacturers will also need to consider customers’ concerns over affordability whilst thinking about the long-term transition away from diesel and petrol vehicles. According to our latest research, 57% of dealers say customers are cutting back on the number of cars per household to save money, and fewer people are considering an electric vehicle as their next car compared to last year.
“Dealers will need to utilise all insight and tools at their disposable to ensure forecourts are stocked to best meet demand.”
John Veichmanis, CEO of Carwow, said: “After a slower August, it’s promising to see the strongest month for UK car manufacturing so far this year – and the best September since 2020. The UK manufacture of electric vehicles is up again, putting Britain in a solid position to become a leading EV manufacturing hub, particularly for EU countries as Britain’s leading trading partners.
“While exports of EVs are strong, up considerably from last year, there’s appetite amongst consumers in the UK to switch to EVs, too. Our data shows that two in five (38%) people are considering one for their next car. The growth in EV manufacturing is hugely positive for the automotive industry, but more broadly must be met with increased investment in infrastructure to get people to make the switch.”