UK car production falls on Brexit fears and diesel sales slump

Car production in Britain has experienced a double-digit slump amid concern over falling diesel sales and the impact of Brexit on exports.

The performance last month, which was partly weather related, prompted the Society of Motor Manufacturers and Traders (SMMT) to repeat its call for continued membership of the EU customs union.

The number of cars built in UK factories in March fell 13% from a year ago to 141,471, the SMMT reported.

Manufacturing for the domestic market tumbled 17.7% last month, while the number of vehicles made for export fell 11.9%. Eight in 10 of the cars produced in the UK, which hosts factories owned by a range of manufacturers including Nissan and BMW, are exported.

Some companies were hit by the bad weather in March when the “beast from the east” brought large parts of the UK to a standstill. Blizzards and freezing temperatures disrupted car production because some staff were unable to get to work, and the supply of parts was also affected.

Production in the first quarter of the year fell by 6.3% compared with the same period in 2017, with 440,426 cars rolling off production lines.

While demand from overseas customers fell 4% between January and March, this was dwarfed by the 14.1% decline in manufacturing for the UK market.

Mike Hawes, SMMT’s chief executive, said: “A double-digit decline in car manufacturing for both home and overseas markets is of considerable concern.

“After recent announcements on jobs cutbacks in the sector, it’s vitally important that the industry and consumers receive greater certainty, both about future policies towards diesel and other low emission technologies, and our post-Brexit trading relationships and customs arrangements.”

Repeating the car industry’s demand for access to the customs union, Hawes said: “Maintaining free and frictionless trade is an absolute priority – it has been fundamental to our past success and is key to our future growth.”

Carmakers are responsible for 13% of the UK’s exports in goods. The customs union is a particularly sensitive issue because some car parts cross the channel multiple times as part of the manufacturing process. However, this week Downing Street reiterated the government’s commitment to leaving the customs union.