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UK automotive manufacturing hits 65-year low as chip shortages pile strain on COVID-battered sector | Enterprise Information

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UK automotive manufacturing plunged to its lowest degree since 1956 final 12 months as a scarcity of semiconductor chips piled additional strain on an business battered by the pandemic, new figures present.

The impression of the shortages – which is being skilled by producers worldwide – is predicted to cut back later this 12 months however proceed to have some impact even into 2023.

If that’s resolved the business nonetheless faces a rising problem from a surge in energy costs of as much as 70%, in accordance with the Society of Motor Producers and Merchants (SMMT)

Mike Hawes mentioned it was a dismal 12 months for the sector

Simply 859,575 autos rolled off UK manufacturing strains in 2021, down by about 60,000 or 6.7% from 2020 and 34% beneath pre-pandemic ranges, the SMMT mentioned

Mike Hawes, the business physique’s chief govt, mentioned it was “a dismal 12 months”.

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“The impression of the semiconductors actually hit residence within the final quarter of final 12 months,” he mentioned.

“Nonetheless there’s extra optimism about 2022, that issues will enhance.”

The chip scarcity will proceed to make life “powerful” within the first half of 2022 however ought to then ease, Mr Hawes added.

An absence of chips, due to pandemic-related shutdowns within the Far East, meant factories needed to decelerate and even cease manufacturing.

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Ford boss: Chip scarcity a ‘large concern’

The chips type a vital a part of trendy automotive making, with every car usually having 1,500 to three,000 – however there was additionally disruption to the import of different elements.

Workers shortages as a result of COVID-19 self-isolation and showroom closures throughout lockdowns took their toll too, as did the everlasting shutdown of the Honda automotive plant in Swindon throughout the summer time, which accounted for a couple of quarter of the annual decline.

The semiconductor scarcity is believed to have knocked 100,000 off whole volumes and early estimates counsel it may imply a smaller however nonetheless important 50,000 hit for this 12 months.

Automobile manufacturing numbers are nonetheless anticipated to see a restoration total and hit over 1,000,000 models in 2022.

However it’s a far cry from the 1.5 million plus whole seen in 2017, a excessive water mark for the business in recent times – and a quantity that the SMMT admitted was unlikely to be reached once more any time quickly until a significant new manufacturing facility opens or present crops bump up manufacturing.

Its personal forecasts counsel a 1.1 million autos being made within the UK by 2025.

Mr Hawes mentioned it was “not all doom and gloom” with funding bulletins – together with at Nissan in Sunderland and Ford at Halewood – totalling £4.9bn final 12 months, the best since 2013 because the business performs “catch again” after a number of years of uncertainty blamed on Brexit, in accordance with Mr Hawes.

There was additionally an uptick for hybrid and electrical manufacturing, now representing 1 / 4 of the full.

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Nissan paves the best way for UK electrical vehicles

Some producers bucked the general UK decline, with manufacturing of BMW-owned Mini in Oxford and the Toyota Corolla in Burnaston growing in contrast with 2020.

However automotive makers, like different sectors, face extra challenges from surging power prices – which may rise by 70%, with the business not presently eligible for reductions given to so-called “power intensive customers” such because the metal sector.

If the semiconductor problem could be resolved, power costs will turn out to be “probably the most speedy, urgent one”, Mr Hawes mentioned.

In the meantime Brexit has added to paperwork and will complicate the transition to battery electrical autos due to advanced “guidelines of origin” standards utilized to commerce offers.

The overwhelming majority of UK autos are constructed for export with Europe the most important buyer.

Mr Hawes admitted that if surging prices proceed it “will stream by way of to costs” including to strain on shoppers already scuffling with inflation at a near-30 12 months excessive.

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