There is hope yet for Britain’s car industry

The UK car industry is, of course, doomed. First we lost our native manufacturers and then, post Brexit, overseas manufacturers like Honda started to close down their UK factories, too. Finally came the farce of BritishVolt: the Tyneside factory which was going to transform the UK car industry by pumping out batteries, but collapsed before a spade could be put into the ground (what there is to buy, which is little more than a plot of land, has since been bought by an Australian company).

The above narrative has become so engrained that it comes as a shock when a set of figures emerges to contradict it. But today the Society of Motor Manufacturers and Traders (SMMT) reports that car manufacturing was up 6.0 per cent in the first three months of the year compared with the same period in 2022. Moreover, exports were up 6.6 per cent, around three quarters of them to the EU. The pace of export growth picked up in March, when it was 10.4 per cent higher than in March 2022 – although homes sales in that month were down 5.1 per cent.

What will hearten many is that manufacturing of hybrids and electric vehicles was up 75 per cent in March compared with a year earlier, so it is not just a case of Britain enjoying a small bounce in the residual market for petrol and diesel cars. We are still managing to make electric cars even without BritishVolt, which was said to be essential if we were to preserve a UK automotive industry.     

To put this in context, UK car manufacturing remains a shadow of its former self. In the past 12 months, 787,554 cars were made in Britain – down from 2.3 million at the peak of the industry in 1972. As recently as 2017, 1.7 million new cars rolled out of UK factories. The current level of manufacturing takes us back to the mid 1950s, when the national and global market for cars was a fraction of what it is now.        

Yet not all is lost. While manufacturing of passenger cars has been in steep decline, Britain has discovered a new niche in light commercial vehicles, which has grown since 2017. It is a much smaller market – 101,886 units have been made in Britain over the past 12 months – but it is a growing one. Whereas restrictions on private cars in cities are likely to damage passenger car sales, light commercial vehicles are on the ascendant as online shopping expands the market for deliveries.

Moreover, the collapse in car manufacturing since the pandemic had a specific contributory cause which now seems to have been resolved: the shortage of microchips, which plummeted in reaction to repeated lockdowns in China. Vehicle manufacturing plummeted all over Europe post-pandemic, Germany included. Supply of microchips now seems to have recovered – although our reliance on microchips made in South East Asia is a reminder of just what would lie in store were China to invade Taiwan, sparking the same kind of trade boycotts as imposed after Russia’s invasion of Taiwan.