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UK car production could take five years to return to 1 million units, says industry

UK car production could take five years to return to 1 million units, says industry

Business

Global semiconductor shortage hammered output in the immediate aftermath of the pandemic

 LONDON (Reuters) - It could take five more years for Britain to return to producing 1 million or more cars a year, the industry body said on Thursday, as figures showed car manufacturing still remained a third below pre-pandemic levels.

UK factories are expected to produce 860,000 cars this year, Society of Motor Manufacturers and Traders (SMMT) Chief Executive Mike Hawes told reporters at a media briefing.

The projected output is 11% higher than in 2022, which was the worst year for UK car production since 1956, but still lags the 1.5 million or more cars produced in the years before the pandemic.

"Looking further ahead, we do want to get back to a million, but that's probably going to take about five years," Hawes said, citing independent forecasts.

"The key thing for us is how competitive are we to grow the industry here, maybe attract new entrants and so forth."

While a global semiconductor shortage hammered output in the immediate aftermath of the pandemic, subsequent plant closures and manufacturing changes by individual automakers stunted British car production further.

The SMMT said car production so far this year remained 32.5% below 2019 levels.

The car industry, a significant driver of manufacturing and exports with eight in 10 cars produced domestically heading for Europe and other overseas markets, received a boost last week when Tata Motors committed to building a major electric vehicle (EV) battery plant in Britain.

Still, automakers faced other challenges to increase production including high energy costs, which Hawes said was the "biggest obstacle" cited by nine out of 10 automotive firms in a recent survey.

The industry also faces post-Brexit EU trade requirements on rules of origin for EVs from next year, which could lead to tariffs of 10% being levied on trade between the two blocs.

"The impact that would have on British electric vehicle competitiveness is significant," Hawes said, reiterating calls for the rules to be delayed until 2027 for domestic EV production to catch up.

"The (European) Commission at the moment is unpersuaded of that ... We do need to find a pragmatic solution."




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