2023.01.2609:17:00UTC+00UK Car Production Falls Most In Over 6 Decades Despite Record EV Output

UK car production declined at the fastest pace in 66 years during the year 2022, as global chip shortages and structural changes hampered output coupled with weaker exports, while electrical vehicle production reached a record level, data from the Society of Motor Manufacturers and Traders, or SMMT, showed on Thursday.

Total car production fell 9.8 percent to 775,014 units, which was the lowest level since 1956. In 2021, the car production was 859,575 units.

Citing independent outlook, SMMT said UK car and light van output should rise by 15 percent to 984,000 units in 2023 - 842,200 cars and 141,800 light vans, with easing semiconductor shortages. Production volumes are projected to surpass a million vehicles by 2025.

The main reasons for the depressed output in 2022 were the crippling global shortage of semiconductors, which limited the ability to build cars in line with demand, the SMMT said.

Besides this, structural changes as well as the supply chain issues in China in connection with pandemic restrictions played a key role in obstructing overall car production.

Read more: UK Private Sector Shrinks Most In 2 Years

The volume of domestic production rose 9.4 percent, but this was offset by a 14.0 percent fall in exports.

In December, UK car production slumped 17.9 percent yearly, with both domestic and foreign demand falling by 25.0 percent and 15.4 percent, respectively. Production grew in October and November.

Despite facing global challenges, UK factories produced a record number of electrical vehicles, or EVs, in 2022, totaling 234,066 units. This shows a 4.5 percent rise annually to represent almost a third of all car production in the country.

Since 2017, the value of exports of electrical vehicles has risen seven fold, from GBP 1.3 billion to more than GBP 10 billion. This clearly indicates the important role of electrified vehicle production in the UK economy, especially the value of exports.

Figures showed that electrified vehicles represent 44.7 percent of overall car exports in the British market.

Read more: UK Order Book Balance Falls, Cost Pressures Ease: CBI

Though shipments declined 10.0 percent, the EU remained the sector's largest market for British cars, with 57.6 percent of exports, or 349,424 units.

"The potential for the electrical car sector to deliver economic growth by building more of these zero emission models is self-evident, however, we must make the right decisions now," Mike Hawes, chief executive at SMMT, said.