UK car manufacturing output fell 95.4% in May with just 5,314 vehicles rolling off production lines, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).
This marks the worst May for the sector since 1946, although performance improved on the prior month when only 197 units were built, as a result of factory shutdowns due to the Covid-19 pandemic.
Despite two thirds of the UK's automotive plants starting up again during May, capacity was 'severely held back' by social distancing requirements and reduced demand, the SMMT said, with key global markets only just beginning to reopen and the UK remaining in lockdown. 4,260 cars were exported in May, most into the EU, the US and China, and with English car showrooms not reopening until 1 June only 1,054 models were built for domestic buyers.
In the first five months of the year, UK factories turned out 324,763 cars, a decline of almost 42% on the same period in 2019. The full year outlook is now expected to be fewer than one million units.
The figures arose from SMMT's latest member survey, which is revealing the challenges companies are facing as they emerge from the pandemic. Liquidity was singled out as a major issue for automotive businesses as they seek to ramp up operations, with 70% experiencing challenges in this area. According to the SMMT, up to one in six jobs could be at risk of redundancy when the furlough scheme comes to an end in September.
"May's figures are yet more evidence of why the UK industry, like its global rivals, needs dedicated support to drive a successful restart," said Mike Hawes, SMMT Chief Executive. "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 investment that will drive long-term recovery - a green recovery - which is inextricably linked to the sector's success."
The SMMT welcomed the Government's commitment to 'turbocharge' negotiations to secure a comprehensive free trade agreement with the EU by the end of the year, fearing the industry cannot withstand a second shock of a hard Brexit after being already hit hard by the pandemic.
Find out how other sectors within the fastener industry are adapting throughout the Covid-19 recovery in the latest issue of Torque Magazine.
