Thursday 26 January 2017 6:23 am

Car manufacturing hits its highest level in 17 years - as auto makers slash investment

UK car manufacturing hit a record high in 2016, new figures have shown – just as car manufacturers slashed the amount they invested in the UK.

Figures published today by the Society of Motor Manufacturers and Traders (SMMT) showed the UK made 1.7m vehicles in 2016, up 8.5 per cent on the year before and the highest figure since 1999.

Meanwhile, the amount car makers invested in the UK fell from £2.5bn in 2015 to £1.7bn last year as they awaited the outcome of Brexit, new figures have shown – just as the number of vehicles manufactured in the UK rose to a 17-year high.

Among the manufacturers, Jaguar Land Rover took the top spot for the second year in a row, making 544,000 cars across its three plants in Liverpool and the West Midlands, up six per cent from last year. That was followed by Nissan, which made half a million cars, and Mini, which made 211,000

Mike Hawes, the chief executive of the SMMT, warned manufacturers are awaiting clarity about Brexit negotiations before they plough more cash into the UK. 

In October Nissan agreed to make its next Qashqai model in the UK, Hawes suggested others may hold back.

"Investors are sitting on their hands… companies are delaying investment decisions until they have greater certainty," he said at a briefing. 

"Everyone is looking to see what the future relationship is going to be."

Along with the finance sector, car makers were highlighted in a speech last week by Theresa May as a sector which could be left with measures similar to those they currently enjoy in the UK's agreement with the Single Market after Article 50 is triggered. 

"It makes no sense to start again from scratch when Britain and the remaining ember states have adhered to the same rules for so many years," she said.

The industry has expressed concern about the effect of a 10 per cent tariff on exports to Europe, which would be imposed under World Trade Organisation (WTO) rules, the "worst case" Brexit scenario. Today's figures showed eight in 10 cars made in the UK, or 1.35m, were exported.

Yesterday Hawes warned WTO rules could cost the industry £2.4bn more a year to import cars and £1.8bn to export. The rules will add £1,500 to the price of each car exported, he said.

The figures showed Europe accounts for more than half of UK exports, while exports to the region rose 7.5 per cent on the previous year, to just under 760,000 vehicles.

That was followed by the US, which bought 14.5 per cent of cars manufactured in Britain.