UK plant closures to cost car industry £8.2bn

The closure of UK car plants from March to mid-May will cost the car industry an estimated £8.2 billion, according to research from the Society of Motor Manufacturers and Traders (SMMT).

The findings come as March figures show UK car production fell 37.6% year on year, due to coronavirus halting manufacturing. The SMMT said 140 days of production across all UK car makers were lost in March. Only 78,767 vehicles were made – 47,428 fewer than in March 2019. 

The output for UK and overseas markets dropped 36.8% and 37.8% respectively. Demand from popular export markets the US and EU was particularly bad, but shipments to China rose by 2.3% as the country’s economy started to recover following the pandemic.

Research published by the SMMT suggested the crisis could mean 257,000 fewer cars are made across all UK factories this year, based on them remaining closed until mid-May. This amounts to an estimated cost to the industry of £8.2bn, equivalent to a fifth of UK car makers’ combined annual turnover.

However, it warned the outlook could be much worse “if subsequent demand is weak and the speed at which production lines are able to ramp up is constrained”. It added that the first step to counter this must be to open car dealerships as soon as the situation allows.

More than half of car makers have reported revenues have fallen by 50%, according to the SMMT. Almost two-thirds of the full-time car manufacturing workforce have been furloughed. 

SMMT chief executive Mike Hawes said: “UK Automotive is fundamentally strong but, as these figures show, it is being tested like never before, with each week of shutdown costing the sector and economy billions. Government’s emergency measures are helping keep many companies afloat and thousands of people in jobs, but liquidity remains a major concern and will become even more stretched as the industry begins to restart.

“To get production lines rolling, we need a package of measures that supports the entire industry. We need coordination and collaboration with government, the workforce and wider stakeholders to unlock the sector in a safe and sustainable way. This will include new workplace guidance, additional measures to ease cash flow and help furloughed colleagues back to work, as well as demand-side measure to help encourage customers back into the market. This should be seen as long-term investment into the underlying competitiveness of an industry critical to the health of the economy and the livelihoods of thousands of households right across the UK.”

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