Why Has UK Auto Manufacturing Collapsed 24% in Three Years?

81% of the vehicles are exported; they can be built anywhere. Honda is leaving. Nissan may be too. Vauxhall may be shuttered. Jaguar Land Rover offshored some production. But EV production soared.

Auto production in the UK slumped by 14.2% in 2019 to 1.3 million units, the lowest since 2010 when the industry was grappling with the fallout of the Global Financial Crisis. Five years ago, UK car production was growing and on target to hit 2 million units a year by 2020, beating the record set in 1972. Instead, it has slumped for the past three years in a row, in total by 24% since 2016, according to the industry group, the Society of Motor Manufacturers and Traders (SMMT):

How important is auto manufacturing in the UK’s total manufacturing sector? According to the SMMT, automakers in the UK employ 168,000 people (1 in 14 of total manufacturing employment). Automakers also support an additional 279,000 jobs in the UK. Annual salaries are typically 21% higher than the average across all UK employment. And “in regions such as the North East and West Midlands, automotive accounts for more than one in six manufacturing jobs.”

The industry faces a litany of problems, including the broad, ongoing shift away from diesel across Europe, shifting production to other countries, significant model production changes, low confidence in the UK economy, sliding demand at home and overseas, and Brexit-related issues.

81% of the vehicles are exported; they can be built anywhere.

Production for domestic sales dropped 12.3% in 2019, to 247,000 vehicles. Production for export dropped by 14.7% to 1.056 million vehicles, with overseas orders still accounting for 81% of the vehicles assembled in UK plants.

The manufacturers with the sharpest production declines in 2019 compared to 2018, were:

  • Honda: -32%
  • Nissan, the second largest car manufacturer in UK: -21%
  • Vauxhall (UK’s Opel, subsidiary of French automaker PSA): -20%
  • Jaguar Land Rover (JLR), UK’s largest car manufacturer: -14.5%.

Honda and Nissan have plants around the world and can build vehicles anywhere.

Even JLR has plants in multiple countries, including in the EU (Slovakia), India, China (joint venture with state-owned Chery Automobiles), and Brazil. In 2018, JLR shifted production of its Land Rover Defender from the the UK to its assembly plant in Slovakia, where it cashed in €125 million of investment aid from the Slovakian government.

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