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UK CAR PRODUCTION CLIMBS FOR FIFTH YEARBack

CarProdCarmakers in the UK staged a late rally in 2014, clocking up the best December production for a decade and ensuring that the country maintained its record of rising output for a fifth year running. Automotive manufacturing has been a notable success for British industry in recent years, with foreign-owned companies such as Jaguar Land Rover (JLR) attracting big investments and churning out exports to big markets such as China and the US.

UK-based producers have also staged a rapid shift upmarket. The wholesale value of UK car exports has more than doubled during the past decade, from about £12bn in 2004 to more than £26bn last year, on broadly similar export numbers.
During the same period, the value of the average exported car has gone from £10,200 to £21,800.

After a year of uncertainty in global markets such as Russia, plus a summer stoppage at Nissan’s Sunderland plant due to technical problems, and the launch of several new models at JLR, overall output had been expected to fall last year.
However, a 27 per cent year-on-year rise in December ensured that 2014 production edged up by 1.2 per cent compared with the previous year to 1.52m vehicles — still short of the all-time record of 1.9m vehicles set in 1972.

“These production figures are testament to the strength of our automotive industry, and show that, even in tough economic conditions, it continues to be one of the driving forces behind our economic recovery,” said Vince Cable, the business secretary.

Almost 80 per cent of cars made in the UK are exported, with the EU accounting for about half of total production. After six years of decline, EU car sales staged a turnround this year, with registrations up about 6 per cent.

China is now the second-largest market for UK car exports, at about 12 per cent, compared with 1 per cent in 2007. Exports to that country rose about 24 per cent in the first nine months of the year compared with the same period in 2013.
But Russia, the fourth-biggest export destination after the US, has proved more challenging. JLR, which accounts for more than a quarter of UK production, temporarily suspended deliveries to the country last month. Russia suffered a 10 per cent decline in car sales in 2014 and could see a fall by up to a quarter this year, according to the Association of European Businesses.

The automotive industry . . . continues to be one of the driving forces behind our economic recovery
– Vince Cable, business secretary – “Russia’s been a disaster in terms of being able to shift metal,” said Phil Harrold, automotive partner at PwC professional services. UK engine production and commercial vehicle output have been disappointing. Figures set to be released on Friday by the Society of Motor Manufacturers and Traders are expected to show a marked decline on both fronts in 2014. Van production, in particular, has been affected by the closure of Ford’s commercial vehicle plant in Southampton in 2013. However, 2014 saw several investments in engine production, such as JLR’s new manufacturing centre in Wolverhampton and Ford pledging £190m for a new diesel engine production line at its Dagenham factory in east London.

Source: Financial Times

Posted by Sue Robinson on 30/01/2015