British car production falls at quickest pace since recession

By Costas Pitas

 

FILE PHOTO: Aston Martin Lagonda cars are parked outside the new factory at Saint Athan, Wales, Britain December 6, 2019. REUTERS/Rebecca Naden

 

LONDON (Reuters) - British car output dropped last year at the fastest rate since the 2008-9 recession, hit by slumping exports and diesel demand, as an industry body called for an ambitious post-Brexit trade deal to protect the sector.

 

Investment, however, nearly doubled to 1.1 billion pounds ($1.5 billion) due to a decision by Jaguar Land Rover <TAMO.NS> to build electric vehicles in Britain.

 

Production fell by an annual 14.2% to 1.3 million cars in 2019, the third consecutive fall, also hit by some automakers closing factories for additional days in case of Brexit-related disruption, according to the Society of Motor Manufacturers and Traders (SMMT). Output fell by nearly a third in 2009.

 

"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 autos market, and the need to invest billions in electric models.

 

In Britain, exports were worst hit with demand down 26.4% from China and 17.7% from Japan.

 

The UK's biggest exporter of goods is now seeking the closest possible relationship with the EU, its largest market where over half of auto exports are sent, avoiding tariffs and customs barriers.

 

When Britain leaves the EU on Jan. 31, a transition period comes into force for the rest of the year during which time little will change, but politicians need to then negotiate the future partnership to take effect from 2021.

 

Whilst output is forecast to fall only marginally in 2020, a series of investments are due which will affect future levels.

 

Peugeot <PEUP.PA> 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 there dropped 20% in 2019.

 

Nissan <7201.T> is due to begin making its new Qashqai vehicle at its Sunderland factory, where output dropped 22%, but has warned that any duties would put its entire European business model in jeopardy.

 

Prime Minister Boris Johnson is keen to use Brexit as an opportunity to improve trade with the United States, to which 19% of exported cars are sent, but the industry is focused on maintaining frictionless trade with the Europe.

 

"The U.S. is not our priority compared to the EU," said Hawes.

 

Thorny issues remain over whether British and EU components can continue to be counted together in trade deals and the sector has warned that regulatory divergence could cost billions and lead to some models not being sold in Britain.

 

"If the cost of compliance can't be met by the margin you are going to make on total sales in the UK then you say 'I can't afford to engineer that model for the UK market,'" said Hawes.

 

(Editing by Stephen Addison)

 

-- © Copyright Reuters 2020-01-30

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Not cars but Norton Motorcycles gone into administration yesterday as well aa cannot pay tax bill.

Watch closely as the British automobile industry quickly disappears for the sake of blue passports.

27 minutes ago, cmarshall said:

Watch closely as the British automobile industry quickly disappears for the sake of blue passports.

There will be plenty of bendy bananas they’ll be able to eat as compensation...

How many of those car workers voted for Brexit?

46 minutes ago, Rookiescot said:

How many of those car workers voted for Brexit?

Probably many of the ones who were bored of their jobs at car factories and secretly always knew that becoming nurses is what they really wanted to do.

 

Worry not, there will be loads of open positions at NHS once those EU workers, who did not yet get the message "You are not welcome here", will be kicked out of the country. Ex autoworkers and pensionnaires will be just fine.

 

6 minutes ago, TheDark said:

Probably many of the ones who were bored of their jobs at car factories and secretly always knew that becoming nurses is what they really wanted to do.

 

Worry not, there will be loads of open positions at NHS once those EU workers, who did not yet get the message "You are not welcome here", will be kicked out of the country. Ex autoworkers and pensionnaires will be just fine.

 

 There will be Porkchops and applesauce   for everyone 

4 hours ago, cmarshall said:

Watch closely as the British automobile industry quickly disappears for the sake of blue passports.

Funny I read it totally differently, if Germany wants to sell BMW MERC etc into the UK they can start making them there - simple

Edited January 30, 20206 yr by smedly

The UK car market except for a few top of the range cars is doomed.

High wages along with new duties into Europe will see them move their factories to places like Poland

58 minutes ago, smedly said:

Funny I read it totally differently, if Germany wants to sell BMW MERC etc into the UK they can start making them there - simple

Or they just don’t bother.
 

Why spend millions to build or retool when the closed off market isn’t large enough to justify the investment, and you won’t be able export competively back to the market you used to have unfettered access to. 

Edited January 30, 20206 yr by samran

34 minutes ago, samran said:

Why spend millions to build or retool when the closed off market isn’t large enough to justify the investment,

what world are you living - the UK market is huge

 

of course your post is so stupid maybe you are making a little joke - sorry for not getting it - I guess that reflects on the person posting

 

you do realise that the UK market alone is worth (for the EU) is more than 19 member states together and the second or first biggest for the EU, actual facts probably hurt for some to hear 

58 minutes ago, smedly said:

what world are you living - the UK market is huge

 

of course your post is so stupid maybe you are making a little joke - sorry for not getting it - I guess that reflects on the person posting

 

you do realise that the UK market alone is worth (for the EU) is more than 19 member states together and the second or first biggest for the EU, actual facts probably hurt for some to hear 

You may have noticed an ‘or’ at the start of my first message. 
 

‘or’. It is an important word.

 

The hard heads back at head office will be asking the question - do we have a big enough market if we produce out of the UK?
 

Will we be able to produce there competitively enough to compensate for the tariffs that the EU will slap on vehicles originating for the the UK? 
 

Is there a large enough luxury car market in the UK to justify our ongoing investment there?

 

Or....(there is that word again!) we just produce at once or two central locations in Europe, taking advantage of our economies of scale there, and export the cars to the UK?

 

They are legitimate economic questions, but in your 30th of January  excitement you got too easily offended by what is a rational economic question, and throw in a few insults to boot. 
 

Talk about thin skinned! 

Edited January 30, 20206 yr by samran

Going the way of their motorcycle industry.....Unless suddenly become competitive.

Actually, the British owned British motor industry is doing very well.

 

Morgan has a full order book and is producing cars at a breathtaking dozens a week. All the others are basically foreign owned assembly plants. Rolls-Royce are BMW, Bentley are VW, Jaguar/Land Rover are Tata and Aston Martin are about to change from Kuwati to Canadian and McLaren are Bahrainian. 

1 minute ago, mrfill said:

Actually, the British owned British motor industry is doing very well.

 

Morgan has a full order book and is producing cars at a breathtaking dozens a week. All the others are basically foreign owned assembly plants. Rolls-Royce are BMW, Bentley are VW, Jaguar/Land Rover are Tata and Aston Martin are about to change from Kuwati to Canadian and McLaren are Bahrainian. 

 

and Allard might end up in the US for good unless some in UK get their yayas out

 

 

18 minutes ago, mejomini said:

Going the way of their motorcycle industry.....Unless suddenly become competitive.

It wasn't competition that killed the one horse motorcycle industry (Triumph) - it was failure to pay the taxes due...

3 hours ago, smedly said:

Funny I read it totally differently, if Germany wants to sell BMW MERC etc into the UK they can start making them there - simple

Economies of scale will prevent any EU car manufacturer to start in the UK. Only the opposite, like BMW-Mini, concentrated to their factory in Borne-NL.

2 hours ago, smedly said:

what world are you living - the UK market is huge

Do you realise that the UK market alone is worth (for the EU) is more than 19 member states together and the second or first biggest for the EU, actual facts probably hurt for some to hear 

Only one tiny difference; these 19 EU member states form - together with all others - ONE big single market. Only at some restaurants you can see somethink looking like the old borders. For the UK ( or soon the Single Kingdom ?) it involves a lot of export documents, with also a currency risk.

Donot forget: an out-of-competition situation for UK manufactured cars into the EU would benefit MANY inside the EU.

6 hours ago, Rookiescot said:

How many of those car workers voted for Brexit?

all of them

3 hours ago, smedly said:

what world are you living - the UK market is huge

 

of course your post is so stupid maybe you are making a little joke - sorry for not getting it - I guess that reflects on the person posting

 

you do realise that the UK market alone is worth (for the EU) is more than 19 member states together and the second or first biggest for the EU, actual facts probably hurt for some to hear 

Alice in Wonderland..... ????

Wake up buddy ????

12 hours ago, Orac said:

Not cars but Norton Motorcycles gone into administration yesterday as well aa cannot pay tax bill.

Hardly surprising. Last time I owned a Norton was in the mid 1970's. Didn't realise they were still in business. Norville yes, but surely not Norton as they used to be. Unless you mean the joke new bike the American company was going to build. That was never going to happen to any great degree.

13 hours ago, samran said:

Or they just don’t bother.
 

Why spend millions to build or retool when the closed off market isn’t large enough to justify the investment, and you won’t be able export competively back to the market you used to have unfettered access to. 

 

Wrong.

 

https://www.ft.com/content/c06b1762-761d-11e8-b326-75a27d27ea5f

 

 

German carmakers will bend over backwards to accommodate the UK. You seem to have a very tenuous grasp of basic economics.

 

11 hours ago, puipuitom said:

Economies of scale will prevent any EU car manufacturer to start in the UK. Only the opposite, like BMW-Mini, concentrated to their factory in Borne-NL.

https://en.wikipedia.org/wiki/Automotive_industry_by_country

 

 

Stick to clogs and windmills, the grown-up countries are discussing car manufacturing.

37 minutes ago, nkg said:

 

Wrong.

 

https://www.ft.com/content/c06b1762-761d-11e8-b326-75a27d27ea5f

 

 

German carmakers will bend over backwards to accommodate the UK. You seem to have a very tenuous grasp of basic economics.

 

I’m not sure how you’ve proven I’ve got a tenuous grasp on economics. You’ve actually proven my point.
 

All you’ve shown is a passage saying German car makers export lots of cars to the UK, cars which are manufactured on the continent. 
 

The question after brexit is whether they simply manufacture all cars on the continent which are destined for the UK market, or whether they continue to produce cars and components in the UK itself - some which which will be needed to be exported back to the continent. After all, the viability of the manufacturing plants in the UK isn’t only reliant on what they sell there, but in the rest of the EU as well. 
 

To use the same source as you, the British government isn’t going to raise tariffs even in the event of a no deal brexit. But, in the case of a no deal brexit, the EU will impose its common 10% tariff, making anything coming out of the Uk more expensive. 

https://www.ft.com/content/b89dffbc-e99a-11e9-85f4-d00e5018f061

 

This situation will create an additional cost on anything which leaves the Uk for the EU, thereby putting into question the viability of any UK based plants, a question which will need to be answered. 
 

So again we have another flaccid ‘gotchya’ post from economic illiterate brexiters desperately holding onto the myth ‘they need us for than we need them’...

 

Edited January 30, 20206 yr by samran

44 minutes ago, samran said:

I’m not sure how you’ve proven I’ve got a tenuous grasp on economics. You’ve actually proven my point.
 

All you’ve shown is a passage saying German car makers export lots of cars to the UK, cars which are manufactured on the continent. 
 

The question after brexit is whether they simply manufacture all cars on the continent which are destined for the UK market, or whether they continue to produce cars and components in the UK itself - some which which will be needed to be exported back to the continent. After all, the viability of the manufacturing plants in the UK isn’t only reliant on what they sell there, but in the rest of the EU as well. 
 

To use the same source as you, the British government isn’t going to raise tariffs even in the event of a no deal brexit. But, in the case of a no deal brexit, the EU will impose its common 10% tariff, making anything coming out of the Uk more expensive. 

https://www.ft.com/content/b89dffbc-e99a-11e9-85f4-d00e5018f061

 

This situation will create an additional cost on anything which leaves the Uk for the EU, thereby putting into question the viability of any UK based plants, a question which will need to be answered. 
 

So again we have another flaccid ‘gotchya’ post from economic illiterate brexiters desperately holding onto the myth ‘they need us for than we need them’...

 

 

 

Literacy must not be your strong point either.

 

You said "the closed off market isn’t large enough to justify the investment".

 

I pointed out that the UK car market is by far Germany's largest, and therefore would justify substantial investment. Writing an essay and calling me a "brexiter" doesn't make you right.

 

 

19 minutes ago, nkg said:

 

Literacy must not be your strong point either.

 

You said "the closed off market isn’t large enough to justify the investment".

 

I pointed out that the UK car market is by far Germany's largest, and therefore would justify substantial investment. Writing an essay and calling me a "brexiter" doesn't make you right.

 

 

You aren’t getting it.
 

All I am saying is the question that will be asked by the hard heads is where that investment will be justified - on the continent where they can sell to the rest of the EU and still into the UK under a post hard brexit zero tariff regime. 
 

Or...

 

Produce some of the cars in the UK but have to deal with external EU tariffs on any components which leave the UK. 
 

The second scenario will be more expensive. Sums will be done to see if ongoing investment in the Uk will be viable. 

28 minutes ago, nkg said:

 

Literacy must not be your strong point either.

 

You said "the closed off market isn’t large enough to justify the investment".

 

I pointed out that the UK car market is by far Germany's largest, and therefore would justify substantial investment. Writing an essay and calling me a "brexiter" doesn't make you right.

 

 

This is information that you need.

 

https://www.acea.be/statistics/article/motor-vehicle-trade-between-the-uk-and-main-eu-partners

1 minute ago, Rookiescot said:

This is information that you need.

 

https://www.acea.be/statistics/article/motor-vehicle-trade-between-the-uk-and-main-eu-partners

 

Why is this relevant to anything?

Just now, nkg said:

 

Why is this relevant to anything?

Because it shows just what a weak position UK car manufacturing is in relative to the EU.

You go on about BMW selling units in the UK as if the EU must bend to your will but the reality is UK car production needs access to the EU far more than the EU does to the UK.

The entire premise for your argument is flawed.

 

In 2017, The United Kingdom produced 1.75 million motor vehicles, exporting 800,000 of these within the European Union. 80% of the UK’s car production is exported.

 

IN 2017 The 27 EU member states produced 19.69 million motor vehicles and exported 2.3 million of these to the United Kingdom − representing 82% of the UK’s motor vehicle import volume, worth €38 billion.

 

The biggest exporter of cars to the UK is Germany, followed by Belgium