Expert Blog

How British car-making is faring in 2017

20170921_How british car-making is faring in 2017 [1]

On this blog, we regularly report on the numbers of new car registrations and van registrations in the UK – both of which have reached record heights in recent months. Those statistics tell us about the strength of vehicle sales, but what about the other side of the equation: production?

To find out how Britain’s automotive industry is faring in that respect, we can turn to the manufacturing statistics released each month by the Society of Motor Manufacturers and Traders. The latest figures, shown in the graph below, paint a fairly rosy picture. 1.71 million cars were built in the UK in the year to the end of July, up 0.4% on the previous 12 months.

That number has fallen slightly from the all-time record of 1.76 million cars produced in the 12 months between April 2016 and March 2017, however. That is because the last few months have seen a decline: 531,533 cars have been built since the financial year began in April, compared to 585,333 in the same period last year – a 9.2% drop. It is too early to say, of course, whether this is merely a temporary blip or the start of a trend.

Meanwhile, some manufacturers have announced significant new investments in British car-making over the past year. In October, Nissan confirmed that both the new Qashqai and X-Trail models will be built at its Sunderland plant. In March, Toyota committed an extra £240 million of investment into its Burnaston factory. In July, BMW revealed that the new electric Mini will be produced in Oxford. Each of these announcements will help to secure the future of manufacturing jobs in the UK.

When it comes to commercial vehicles, two very different pictures have emerged: one for those being sold in the UK, and another for those being sold abroad – mostly elsewhere in Europe. These are shown in the graph below.

Production of commercial vehicles for the domestic market has fallen by a 30% in the last year. As we reported recently, registrations of vans are also down this year after a record-breaking 2016, but the decline in manufacturing is far greater than the dip in demand.

At the same time, however, production of commercial vehicles for export has grown significantly. 56,621 were built in the year to this July, up 17% from the previous 12 months. That follows even faster growth over the past 18 months. Exports of vans, lorries, buses and coaches have been growing strongly for a good while now.

The upshot of this is that exports account for an increasingly large share of vehicle manufacturing. In 2015, 50% of all commercial vehicles built in the UK were sold abroad. In 2017, so far, that proportion is up to 63%.

Overall, then, the story of British manufacturing in 2017 is a mixed one. Strong growth in exports – particularly of commercial vehicles – balances out slightly reduced domestic demand. Moreover, looking ahead, welcome new investments help to alleviate broader economic uncertainty. We will be keeping a close eye on how these trends develop in future and will report back on this blog. Stay tuned.

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