UK car manufacturing has dipped for a fifth month this year, with output dropping 4.1 per cent in September, as the industry cited consumer and business jitters affecting demand.
The Society of Motor Manufacturers and Traders (SMMT) said today that 153,224 cars rolled off the production lines for the month, 6,500 fewer cars than in the same month last year.
Domestic demand for September had a steep drop, down 14.2 per cent to 31,421 units, contributing to an overall production decrease of 2.2 per cent for the year so far.
Production for export fell by 1.1 per cent, which was in line with slower growth across EU markets, but the substantial double-digit losses in the home market drove the overall drop.
Mike Hawes, SMMT chief executive, said: "With UK car manufacturing falling for a fifth month this year, it’s clear that declining consumer and business confidence is affecting domestic demand and hence production volumes."
The auto industry has been vocal about the need for more certainty from Brexit negotiations, and saying a transitional deal was imperative to stop the automotive sector falling off a "cliff edge".
Meanwhile, Toyota's European chairman yesterday warned that the "fog" around Brexit negotiations needed to be cleared, because at present it was hindering the car giant's plans for its UK operations.
And today, Hawes echoed that warning, saying:
Brexit is the greatest challenge of our times and yet we still don’t have any clarity on what our future relationship with our biggest trading partner will look like, nor detail of the transitional deal being sought.
Leaving the EU with no deal would be the worst outcome for our sector so we urge government to deliver on its commitments and safeguard the competitiveness of the industry.
Stuart Apperley, director and head of UK automotive at Lloyds Bank commercial banking, said there will be "a degree of natural adjustment" after such a strong year in 2016, but there is unlikely to be a dramatic drop in volumes, as "the sector is somewhat insulated from the effects of a more reluctant UK consumer while exports remain relatively healthy".
The UK is home to the production of a number of models that are selling well abroad.
However, he said Brexit uncertainty continued to prove a challenge for the industry.
In a sector where technological change is moving at its fastest rate for decades, securing investment is important for plants to make sure they have the equipment and skills needed to manufacture future vehicles.