Hit by slumping exports and the declining diesel demand, British car output plummeted last year at the fastest rate since the 2008-2009 recession and now faces an uncertain post-Brexit future, China Daily reported.
Production fell by an annual 14.2% to 1.3 million cars in 2019, the third consecutive annual slide, the report said.
Some automakers’ decision to close factories for additional days in case of Brexit-related disruption also hurt sales, according to the Society of Motor Manufacturers and Traders, the report said.
Investment last year, however, nearly doubled to 1.1 billion pounds (US$1.5 billion) due to a decision by Jaguar Land Rover to build electric vehicles in Britain.
“It is essential we re-establish our global competitiveness and that starts with an ambitious free trade agreement with Europe,” said SMMT Chief Executive Mike Hawes.
The global sector has been hit by declining sales in key countries such as China, the world’s biggest auto market, and the need for investment in electric models, the report said.
In Britain, exports were hit worst, with demand down 26.4% from China and 17.7% from Japan.
When Britain leaves the EU on Jan 31, a transition period will come into play for the rest of the year during which time little will change. But politicians will then need to negotiate future partnerships to take effect from 2021, the report said.
Peugeot warned last year that a decision to keep open its Ellesmere Port car plant in Cheshire is dependent on Britain’s future relationship with the EU. Production following the warning dropped 20% in 2019, the report said.
Nissan is due to begin making its new Qashqai vehicle at its Sunderland factory, where output dropped 22%, the report said. The company has warned that any tariffs or extra duties would put its entire European business model in jeopardy.
Peter Wells, Professor of Business and Sustainability at Cardiff Business School, told Forbes magazine that Britain’s mass-market auto industry has been weakening for some time.
“The future of the UK automotive industry is particularly bleak because the decision to leave the EU, with all the economic uncertainty and probable added cost entailed, comes at a time of massive and rapid technological and business convulsions sweeping through the industry,” Wells said.
Wells said even before the exit decision it was clear the UK was becoming too expensive to compete in the lower margin segments despite good quality and productivity, the Forbes report said.
Britain’s auto industry may return to pre-EU conditions where, as imports become more expensive and exports more difficult, UK output may focus on the home market.