UK car production stabilises amid spike for electrified vehicles

Ellesmere Port's switch from car to van production hit volumes in January

Hybrid, PHEV and BEV models accounted for 41.3% of cars and light vans produced in the UK last month

The UK's output of new cars and light vans stabilised in January 2023 as production of electrified models surged.

Hybrid, plug-in hybrid and battery-electric models accounted for 41.3% of cars and light vans built in the UK in January, according to new figures released by the Society of Motor Manufacturers and Traders (SMMT).

Overall, 68,575 vehicles rolled off UK production lines last month, a 0.3% decline compared with January 2022.

The 215-unit shortfall was primarily down to structural changes, said the SMMT, with “one major plant” – understood to be Stellantis’s Ellesmere Port facility – switching from car to van production.

This may also explain why electrified vehicle production spiked: Ellesmere Port now only produces electric vans: the Citroën ë-Berlingo, Opel/Vauxhall Combo Electric and Peugeot e-Partner.

Prior to April 2022, the plant was home to the internal-combustion-only previous-generation Vauxhall Astra. Production of the new Astra takes place at Stellantis's factory in Rüsselsheim, Germany.

The SMMT also attributed the stagnation to ongoing supply chain shortages.

UK production for the domestic market grew by 5.6% year on year to 12,196 vehicles.

Meanwhile, exports fell from 57,246 in January 2022 to 56,379 last month, with the decline largely a result of the suspension of vehicle shipments to Russia. The top overseas markets were the EU, comprising 56.6% of exports; the US, with 9.3%; China (8.8%); Japan (4.4%); and Australia (3.3%).

SMMT chief executive Mike Hawes said: “Automotive manufacturing can drive long-term growth for the low-carbon economy but the sector needs competitive conditions to attract investment.

“Recent global developments, however, suggest increasing protectionism which, if not challenged or mitigated, could put the UK at a disadvantage.

“To deliver a wholesale industrial transformation, we need a competitive framework and a pitch that promotes advanced vehicle manufacturing internationally.

“We now look to the forthcoming Budget for the necessary measures that will enable the automotive sector to deliver its undoubted potential.”

The SMMT now forecasts that 2023’s full-year output will rise by 9% to 842,200 cars, which is short of 2021’s 859,575 units.

Last year was the worst for UK vehicle production since 1956 as 775,014 units left factories, a 40.8% shortfall compared with 2019, when 1.3 million were built here.

Nissan chief operating officer Ashwani Gupta recently warned that the UK is becoming "more challenging" for car makers as the dwindling output of cars makes it harder for the industry to attract suppliers, creating a vicious cycle.

Richard Peberdy, UK head of automotive for accounting firm KPMG, said: "At present the UK is proving a less attractive proposition for new vehicle manufacturing facilities due to relatively high labour and energy costs, and access to raw materials and chemicals.

"Some countries, like the USA in the form of its Inflation Reduction Act, have developed bold policy moves to encourage inward investment in next-generation manufacturing facilities for the electric vehicle supply chain - and these are proving effective at securing big-bet investments from car makers. 

"Whilst the UK is a global leader in high-value skills and research, in a globally competitive environment the government and the local industry need to do more to show that it can be a viable manufacturing base for battery and electric vehicle manufacturing at scale."