Car production in Britain fell to its lowest level in 65 years in 2021 as the result of a global shortage of microchips and broader Covid-19 disruptions, but the rapid shift to electric vehicles offered a glimmer of hope.
The number of cars made in the UK fell to 859, 575 last year, 6.7 per cent less than 2020 when the Covid-19-crisis also hampered production and a third less than in 2019 when more than 1.3 million cars rolled off production lines.
On a brighter note, UK electrified vehicle output rose 30 per cent, with factories turning out a record 224,011 battery electric, plug-in hybrid and hybrid electric vehicles – accounting for more than a quarter of total production.
"2021 was another incredibly difficult year for UK car manufacturing – one of the worst since the Second World War," SMMT chief executive Mike Hawes said.
“Despite this miserable year, there is optimism. With Brexit uncertainty largely overcome, investments have been unleashed, most of which will help transform the sector to its zero-emission future.”
While Britain's economy as a whole has largely recovered from the losses caused by Covid-19 – with economic output in November back at pre-pandemic levels – car production in December was 12.7 per cent lower than a year earlier.
The global shortage of semiconductors was the biggest reason for the weak production figures, the SMMT said, because between 1,500 and 3,000 computer chips are used in an average car to control dashboard displays, electric windows, windscreen wipers and lights.
“It’s another example showing how the ongoing supply chain crisis is holding back manufacturing growth, and although new chip manufacturing plants are being built around the world, there is no easy fix to the problem, as many will take years to become fully operational,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Staff absences caused by Covid and the closure of car showrooms during lockdowns in early 2021 also played a role in the dismal car figures, while the shutdown of Honda's car plant in Swindon in the south of England in July was another factor as the manufacturer previously accounted for about 10 per cent of British car production, with the company blaming the closure on low sales across Europe and not because of Brexit.
While more than 80 per cent of British car production is exported, most of it to the European Union, with new trade barriers a major concern for many manufacturers, Mr Hawes said confidence in Britain's automotive industry rose after the agreement of a trade deal with the EU at the end of 2020.
Meanwhile, £4.9 billion ($6.57bn) of potential investment unveiled by carmakers last year, including a new battery plant from Nissan and upgraded sites owned by Vauxhall, Ford and Aston Martin, was a positive sign for the industry, Mr Hawes said.
Another positive sign is the rapid increase in the production of electric and hybrid cars, as the industry approaches a crossroads, with the end of the road in sight for new diesel and petrol models, which cannot be sold from 2030.
Ms Streeter, however, said many consumers are still hesitant about joining the electric vehicle revolution because of range anxiety.
“With charging networks patchy in many parts of the UK, despite promises that a big roll-out is on the way, it’s unlikely we’ll see an immediate rush of new converts, especially given the cost-of-living squeeze and most EV models coming in at a higher initial price point," she said.
"With car manufacturers across the board investing billions in EV production, it’s clear mass adoption will come, once the infrastructure is in place and if the chip shortage can also be overcome.”
Jaguar Land Rover was Britain's biggest car maker in 2021, with 220,554 units, followed by Nissan with 204,522 and BMW's Mini with 186,762 vehicles.
