UK vehicle and engine manufacturing fell in the UK during March 2018, as the automotive market suffers from falling sales and the effect of Brexit.
Engine production dipped by 3.7% according to figures from the SMMT, as demand from UK car plants fell for a second month. Exports provided a resbite to domestic market challenges, with engines leaving the country up by 4.8% in March, and 12.1% year-to-date. So far, more than 780,000 engines have been built in Britain this year.
However, Car production declined in March, with demand falling 13.3% year on year, according to figures. A total of 147,471 cars were built in British factories as the domestic market continued to slow, with demand falling 17.7% in the month.
Exports also declined, down 11.9% due to fluctuations in demand in some global markets. Also, some manufacturers were impacted by the adverse March weather conditions which negatively affected production operations, the body stated.
The figures highlight once again the importance of the export market for the UK, and the impact leaving the EU Customs Union may have. The British Government are currently holding firm on this approach, known as a ‘hard Brexit’, to fully remove the country from any EU ties and rely on its own trade agreements to broker deals.
This would, however, mean adopting tariffs on imports and exports, with current World Trade Organisation (WTO) rates meaning a 10% fee on goods moving in and out of the UK.
Britain’s vehicle and component manufacturers are important contributors to the UK economy and are responsible for 13.0% of all the country’s export of goods. For every one pound generated by the industry, three pounds are delivered to the economy via adjacent sectors such as logistics, retail and finance, with SMMT calculations putting the total economic impact at £219 billion (€251.3 billion), 10% of UK GDP.
SMMT chief executive Mike Hawes comments: “A double-digit decline in car manufacturing for both home and overseas markets is of considerable concern. Following recent announcements on jobs cutbacks in the sector, it’s vitally important that the industry and consumers receive greater certainty, both about future policies towards diesel and other low emission technologies, and our post-Brexit trading relationships and customs arrangements.
“Maintaining free and frictionless trade is an absolute priority – it has been fundamental to our past success and is key to our future growth.”