UK car production picks up in October but forecasts are lowered as domestic demand stutters

 
Rebecca Smith
Overall output for the year is down 1.6 per cent
Overall output for the year is down 1.6 per cent (Source: Getty)

Fewer vehicles are set to roll off production lines at Britain's car plants this year, according to a fresh independent forecast.

The Society of Motor Manufacturers and Traders (SMMT) unveiled the news this morning alongside the brighter announcement that UK new car production had picked up in October, with 157,056 units leaving UK factories. That marked a 3.5 per cent on the same period last year.

But the picture for the year was a bit bleaker, with the production forecast revising the expected UK output for 2017 down to 1.73m, lower than previous expectations of around 1.8m.

Read more: Budget 2017: Government's economic forecasts revised down significantly

While exports were up five per cent for October, domestic demand dropped 2.9 per cent amid consumer confidence jitters, and what the SMMT said was confusion over government policies regarding diesel. For the year to date, domestic demand has dropped 6.8 per cent, while overall output is down 1.6 per cent.

Philip Hammond's yesterday unveiled news of a continued diesel crackdown, including an additional tax for anyone buying a new diesel car.

The SMMT said the troubles with domestic demand played their part in the dampened prediction, as did lower-than-expected production levels of certain models, as some reach the end of their lifecycles.

Mike Hawes, the SMMT's chief executive, said: “It's encouraging to see positive growth in exports this month and a slight increase in overall output."

But he added:

Production for British consumers, however, has continued to fall as domestic demand for new cars decreased for the ninth month this year amidst continued uncertainty over both Brexit and the government's air quality plans.

It's important that confidence is restored to the new car market, as sales of the latest cleaner, greener cars not only address air quality concerns but speed up activity on factory lines across the UK.

The latest independent UK forecast report is worrying news for the sector, predicting annual output which is, at best, static compared with last year. The industry needs stability and a clear roadmap for Brexit if we are to encourage investment and arrest the decline in both the market and business confidence.

Last month, the SMMT reported car manufacturing slipping for a fifth month this year, with output dropping 4.1 per cent in September. There was a steep drop in domestic demand then too, 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.

Read more: UK car production falls for a fifth month this year

Related articles