UK car production falls 95% in May and there’ll not be a scrappage scheme


Around 5,300 cars were produced by UK factories in May compared to 116,000 in the same month a year ago, latest industry figures have confirmed.

Motor manufacturing fell by 95.4 per cent last month, with vehicle plants ‘severely held back by social distancing requirements and reduced demand’, said trade body, Society of Motor Manufacturers and Traders.

With car outputs dwindling, motor sales in Britain well behind the rest of Europe and one in six sector jobs at risk, the industry has been calling on a support package from ministers. 

However, government officials say a scrappage scheme – which reduced the price of new vehicles when a motorists trades in an old one – won’t be launched to reinvigorate the automotive industry.

Production slump continues: Just over 5,000 new cars were build in UK factories last month, as social distancing measures and lower demand hammered outputs to their lowest level in 74 years

Production slump continues: Just over 5,000 new cars were build in UK factories last month, as social distancing measures and lower demand hammered outputs to their lowest level in 74 years

A lowly 5,314 vehicles rolling off production lines in May 2020, according to figures released last week by the SMMT. 

While outputs were higher than in April – when only 197 cars were built but with factories still closed or running at reduced capacity – it still marked the worst May since 1946, records show.

While the majority of UK car manufacturers – around two thirds – had resumed outputs last month, necessary measures put in place following coronavirus meant production was limited.

Demand also remained relatively low as key global markets had only just reopened from lockdown.

Car manufacturing in May fell by a massive 95%, despite two thirds of UK car factories restarting production during the month. It's the worst performance in May since 1946

Car manufacturing in May fell by a massive 95%, despite two thirds of UK car factories restarting production during the month. It’s the worst performance in May since 1946

Four in five cars built in the UK in the month (4,260 models) were exported in May, mostly into the EU, the US and China.

With English car showrooms not reopening until 1 June, only 1,054 models were built for domestic buyers last month.

Calls for the ban on the sale of new petrol, diesel and hybrid cars to be accelerated to 2032 – and include motorbikes

The Committee for Climate Change (CCC) has called on Transport Secretary Grant Shapps to fast-track the ban on the sale of new petrol and diesel cars from 2035 to 2032 ‘at the latest’.

The independent body, which is made up of politicians and scientists, called on ministers to provide ‘detailed policy arrangements’ to enable the ban to be accelerated by three years – and also include a ban on the sale of new motorcycles with internal combustion engines.

Shapps has already suggested the restriction on new petrol, diesel and hybrid vehicles sales could come sooner than outlined.

Speaking as a guest on BBC Radio 5 live in February, he said the ban would happen by 2035 ‘or even 2032’, before stating there would be consultation before any decision is made. 

The CC has also said the Vehicle Excise Duty system should be adapted to provide more significant encouragement for people to buying zero-emission vehicles.

Already, pure-electric cars are already exempt from having to pay first-year rate VED and standard rate tax.

Chancellor Sunak also confirmed in the latest Budget that new electric cars are now also exempt from the expensive car tax, which is applied to all petrol, diesel and hybrid vehicles with a list price of more than £40,000. Owners of these cars need to pay £325 for the first 5 years of the standard rate. 

That means reforms to VED would likely make cars with internal combustion engines even more expensive to tax than they are today. 

The CCC report said: ‘Company car tax reforms, alongside purchase grants and preferential tax treatment, are providing a strong consumer incentive to purchase low-carbon vehicles. 

‘More could be done with Vehicle Excise Duty to strengthen incentives for all buyers and to discourage the most polluting vehicle purchases.’

It means that in the first five months of 2020, UK factories turned out 324,763 cars, representing a decline of 42 per cent on the same period in 2019 and a loss of more than 230,000 units.

As a result, the SMMT has dialled down it’s fully year estimate to be fewer than one million UK-made vehicles in 2020. 

The figures were released in the shadow of the trade body claiming that one in six jobs in the industry are at risk of redundancy once the Government’s Coronavirus Job Retention Scheme comes to an end in November.

Chief executive, Mike Hawes, said: ‘May’s figures are yet more evidence of why the UK industry, like its global rivals, needs dedicated support to drive a successful restart. 

‘Government assistance so far has been vital in keeping many businesses afloat, but the job isn’t done. 

‘Measures to boost cashflow, including additional and tailored finance schemes, tax relief and business rates deferral would deliver immediate results when liquidity is most acute. 

‘We have to retain the highly skilled jobs the sector provides but also ensure the business conditions are competitive so we can unlock the investment that will drive long-term recovery – a green recovery – which is inextricably linked the sector’s success.’

The SMMT has welcomed the government’s commitment to ‘turbocharge’ negotiations to secure a comprehensive free trade agreement with the EU by the end of the year. 

However, the Government won’t be turbocharging to sector with a scrappage scheme, according to the latest reports.

The SMMT has been in communication with Chancellor Rishi Sunak about the effectiveness of a scheme similar to the one launched in 2009 to help the motor industry recover from the financial crisis.

And it has been widely reported that Boris Johnson has been considering an electric-car targeted scrappage deal, offering up to £6,000 off the price of a new zero-emission car if motorists trade in an older, polluting petrol or diesel vehicle.

However, government officials said the Prime Minister has ‘no current plans’ to introduce a scheme of any kind following the pandemic. 

A spokesperson for the Government told Auto Express: ‘We have no current plans to change the existing incentives or to introduce a scrappage scheme. 

‘We are committed to building a greener transport system and reducing carbon emissions to reach our goal of net zero by 2050.’ 

The news comes as industry body Make UK warned that UK manufacturing will not recover from the coronavirus crisis until 2022.

The sector could take a hit of up to £36billion this year in a worst-case scenario as investment plunges and demand for many products grinds to a halt, with car makers hit hardest. 

Renault’s Clio was the most-bought car in Europe in May – and UK market hasn’t recovered as fast as other EU nations, report shows

With Britain’s car dealerships not given the green light to open until 1 June, the UK suffered the biggest decline in registrations in May than any other EU nation, comprehensive market figures show.

Sales of new models fell by 89 per cent in the UK last month – the biggest drop off in Europe, as the table below shows.

In comparison, registrations in Slovenia, Belgium and Austria were back by just a third, while other struggling markets including Italy, France and Spain all bounced back stronger than the UK.

However, it is expected that the gap between the UK and the rest will close in June, with showrooms from the beginning of the month able to welcome back customers following lockdown. 

Felipe Munoz, a global vehicle market analyst, explained: ‘Registrations volumes [in Europe] more than doubled in May, compared to the figures achieved in April. 

‘Despite the positive signs of recovery, a proportion of these registrations could correspond to sales that occurred prior to lockdown; therefore, we still do not have enough information to predict whether Europe will experience a ‘V’ or a ‘U’ shaped recovery.’ 

Jato Dynamics, which complies registrations data for all European nations, said the Renault Clio became the most sought new car in May, overtaking the regular chart topper, the VW Golf. 

Renault's Clio became the best-selling new car in Europe in May 2020, overtaking the VW Golf at the top of the standings

Renault’s Clio became the best-selling new car in Europe in May 2020, overtaking the VW Golf at the top of the standings 

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