The UK car industry produced the lowest number of vehicles in the first half of 2020 since 1954, when second world war rationing ended, as the coronavirus pandemic forced factory closures and prompted at least 11,000 automotive job losses.
Only 381,357 cars rolled off British production lines from January to June, 42.8% lower than last year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
Every car factory in the UK closed during the lockdown amid supply chain problems and concerns over workers’ health. Vauxhall’s factory in Ellesmere Port and sports car maker Aston Martin Lagonda’s main Gaydon plant remain closed. Many of the factories that have since reopened are running at reduced capacity, amid a bleak outlook for demand for cars for the rest of the year as unemployment rises.
The SMMT’s latest forecasts suggest that only 880,000 will be produced this year, a third lower than 2019. Barring 2009, as the global financial crisis hit, the UK industry’s annual output has not dropped below 1m since the 1980s.
The forecasts of lower demand have already prompted a wave of cost-cutting redundancies across the industry, including at Jaguar Land Rover, the UK’s biggest manufacturer, the luxury carmaker Bentley, and sports carmaker McLaren.
The SMMT’s figures suggested that 11,349 job cuts had been publicly announced, but the lobby group’s chief executive, Mike Hawes, acknowledged that many more are likely, particularly in the supply chain, as the government’s furlough scheme comes to an end on 31 October.
The furlough scheme, known as the coronavirus job retention scheme, has been “an absolute lifeline, but the job isn’t finished yet”, Hawes said. As many as a third of the UK auto industry’s workers were furloughed.
Aston Martin Lagonda, which has also cut 500 jobs, on Wednesday illustrated the financial pressure facing the industry, with losses spiralling to £227m in the first half of the year. The pandemic meant that Aston Martin sold only 1,770 cars in the first six months of 2020, down 41% compared with 2019.
The carmaker’s revenues plunged by 64% year on year to only £146m as dealerships around the world were forced to close.
On top of the chaos caused by the pandemic, UK factory bosses are also concerned about yet another Brexit deadline on 31 December, when the UK and EU will move to a new – and as yet unknown – trading relationship. At the same time, the global industry faces heavy investments in battery electric technology.
The automotive industry faces “sectoral challenges like no other”, said Hawes. “Recovery is difficult for all companies, but automotive is unique in facing immense technological shifts, business uncertainty and a fundamental change to trading conditions while dealing with coronavirus.”
Source: The Guardian |NewsColony