United Kingdom auto production in decline - SMMT

United Kingdom auto production in decline - SMMT

In 2017, 1.67m vehicles rolled off production lines, three per cent fewer than the previous year, according to data to be published today by the Society of Motor Manufacturers and Traders (SMMT).

Overseas markets have grown increasingly important, representing four-fifths of output - with the European Union remaining the biggest trading partner - though exports were also down, by 1.1%.

At Peugeot's (PEUP.PA) Vauxhall Ellesmere Port, where the French carmaker is cutting staff to improve efficiency and tackle falling demand for its Astra Sports Tourer model, output slumped 22 percent.

A -9.8% fall in output for the domestic market drove the overall decline, as the market responded to declining business and economic confidence and confusion over government's policy on diesel.

However, India's rank came down from eighth in 2016 to 12th previous year on the list of Britain's biggest Asian markets, as exports of cars to India from the United Kingdom declined by 66.0 per cent to 1,144 units as compared to 3,372 units in 2016.

Overall demand for UK-built engines also spiked, with a production output increase of just under seven per cent.

The EU remained the UK's biggest trading partner, taking more than 50 percent of exports.

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However, the SMMT is clearly anxious that future exports could be under threat, if rapid progress is not made on the trading conditions which will apply after the country leaves the EU.

The news comes as UK Automotive restates the need for an urgent agreement on the terms of a post-Brexit transition deal.

SMMT chief executive Mike Hawes said the investment fall was "significant", adding: "A drop of that magnitude is a concern". However, we urgently need clarity on the transitional arrangements for Brexit, arrangements which must retain all the current benefits else around 10% of our exports could be threatened overnight. Some £1.1 billion of investment earmarked for vehicle and supply chain manufacturing was publicly announced a year ago, down from £1.66 billion in 2016.

Earlier this week, a leaked government reported highlighted the auto industry as one likely to be particularly adversely affected by Brexit, particularly if Britain left the single market without a comprehensive free trade deal with Europe. "The evidence is that [investment] is now stalling so we need rapidprogresson trade discussions".

Despite the overall fall in production, meanwhile, one segment of the market is now expanding.

The SMMT attributes much of the recent growth to investment in factories producing the latest generation of high-tech diesel engines - such as Ford's plant in Dagenham, which alone builds 790,000 units each year. Of the 8,000 people employed in engine production, 3,550 are directly involved in diesel production.

At the moment, there is no sign of that situation changing. Across Europe, too, diesel's market share has been falling, as politicians have become more concerned about urban air quality - and consumers have become anxious in turn about possible restrictions on using their cars.

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