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Thursday, April 28, 2022
Thursday, the Society of Motor Manufacturers and Traders (SMMT) released data that automobile manufacturing in the United Kingdom for March 2022 fell 33.4% compared to March 2021, reaching the weakest March since 2009, during the Great Recession.
76,900 cars were made in the UK in March, compared to 115,498 in 2021. The drop came amid Covid-19, Russia’s invasion of Ukraine and supply chain snarls more generally. Factories face higher energy costs and a shortage of vital components usually sourced from either Russia or Ukraine, including electric wiring and batteries.
SMMT chief executive Mike Hawes announced that “with a backdrop of an increasingly difficult economic environment, including escalating energy costs, urgent action is needed to protect the competitiveness of UK manufacturing”. He urged a response “to safeguard jobs and livelihoods” as the country “[transitions] to electrified vehicles”, which the SMMT reported on Tuesday comprised 20% of UK car sales this year.
Disruptions to the global supply chain have made sourcing many vital materials, such as integrated circuits, more difficult for car manufacturers across Europe. Stellantis CEO Carlos Tavares told Reuters March 8 “we have an escalation of cost that comes from raw materials and energy that is going to put more pressure on the business model”, adding he did not foresee a resolution this year.
On March 14, Reuters revealed automakers from Germany’s Volkswagen and BMW to Netherlands’s Stellantis took steps to reroute production and find alternative sources for components. Last year, Credit Suisse data showed Russia was the fifth-largest producer of iron ore, at 108 million tonnes. Reuters reports the country also contributed 6% of the world’s aluminium, 40% of palladium and 20% of high-grade nickel.
Unique to Britain was Honda’s closure of its Swindon plant in July as sales fell in Europe compared to the United States and Japan. SMMT figures last month showed automobile exports to the US fell 63.8%, and 24.5% to the European Union, the headline one-third drop primarily due to a fall in production for foreign markets.