2020.01.3003:10:00UTC+00UK Car Production Declines For Third Year: SMMT

UK car production decreased for the third consecutive year in 2019 to the lowest in nine years on weak sentiment at home and slower demand from overseas markets, the Society of Motor Manufacturers and Traders, or SMMT, reported Thursday.

Car production decreased 14.2 percent to 1.3 million units in 2019, the lowest since 2010. Production was down 6.4 percent in December.

The fall of UK car manufacturing to its lowest level in almost a decade is of grave concern, Mike Hawes, SMMT chief executive, said.

In 2019, production for domestic market fell 12.3 percent and that for overseas market declined 14.7 percent, with 81 percent of cars built for export - the vast majority to the EU.

Although shipments to the EU27 decreased 11.1 percent, the bloc remains the sector's most important market with its share of exports rising by two percentage points to 54.8 percent.

The SMMT cited weakened consumer and business confidence at home, slower demand in key overseas markets, a number of significant model production changes and a shift from diesel across Europe as factors affecting car production.

Factory shutdowns in the spring and autumn, timed to mitigate expected disruption arising from the anticipated departure of the UK from the EU on March 29 and October 31, also had a marked effect.

Nonetheless, 2019 was a good year for alternatively fuelled and small volume car output, with production up 34.7 percent and 16.2 percent, respectively.

The latest independent production outlook downgraded expectations for 2020 to 1.27 million units, down from the 1.32 million forecast made in November.

Investment in 2019 was around 60 lower than the average for previous seven years. The SMMT said more must be done to encourage overseas investors to invest in the UK.

The lobby called for an ambitious UK-EU free trade deal that drives competitiveness, growth and prosperity.