The Range Rover Velar is boosting Land Rover sales in export markets this year and helped Land Rover post a June sales record in the US
Although UK car production for export markets held up in June, production for the UK domestic market was some 47.2% down on last year's pace. The SMMT said that model cycles, operational changes and preparations ahead of new emissions standards later this year played a part in the June decline.
Demand from the UK market also appears to be on the wane this year according to sales data, although the 47% drop in production in the month of June alone looks like something of an outlier or anomaly. In the first half of the year the UK car market was down by 6.3% on last year at just over 1.3m units.
After exports are taken into account, the overall picture showed a 5.5% output decline in June and the first half as a whole was just 3.3% down on last year with 834,402 cars produced.
The SMMT noted the importance of exports to the UK's auto industry and once again called for Brexit negotiators to back 'free and frictionless trade' to safeguard one of the EU's most valuable assets.
In the six months to June, global demand for British-built cars grew in a number of key markets, notably the US – the UK's second largest exports destination after the EU – where exports rose by 1.5% 'thanks to a raft of new, desirable models'. Demand also grew substantially in Japan (+77.3%) and South Korea (+67.8%), while China maintained its position as the UK's third biggest customer, taking 6.4% of exports.
However, despite a -3.6% decline in demand, the EU remained the UK's biggest trading partner, accounting for 360,270 units – more than half of all cars produced for export (53.4%). Individually, EU countries also made up half of UK Automotive's top 10 export destinations, with Germany, Italy and France the UK's second, third and fourth biggest markets after the US and ahead of China.
Although UK Automotive now exports more than eight out of every 10 cars it builds to more than 160 countries worldwide, it is also a major importer. More than 87% of the cars registered by British buyers in the first six months of the year came from overseas plants, and more than two thirds (69.1%) from the EU, highlighting the importance of tariff- and barrier-free trade.
Mike Hawes, SMMT Chief Executive, said: "June's results demonstrate the risks of judging automotive performance one month in isolation, with numerous and varied factors creating a perfect storm for home market output. Looking at the longer-term picture, the sector is performing as expected in the context of market conditions at home and abroad.
"First half figures are a reminder of the exports-led nature of UK Automotive, the integrated EU supply chain and our mutual dependency on free and frictionless trade. The UK government's latest Brexit proposals are a step in the right direction to safeguard future growth, jobs and consumer choice – notjust in Britain but right across Europe. We now look to negotiators on both sides to recognise the needs of the whole European automotive industry which, combined, employs more than 12 million people. Any disruption risks undermining one of our most valuable shared economic assets."
Stuart Apperley, Director and Head of UK Automotive at Lloyds Bank Commercial Banking, said the UK numbers in June should have been higher. "The combination of rising sales across Europe and comparing June's output figures with the same period last year should have meant these figures would look strong," he said.
"The fact that they don't, and have actually fallen even in comparison with a year ago, shows the extent of the challenges facing UK car manufacturers right now.
"Exports were strong but sales in the UK fell as continued pressure on consumer spending, together with only lukewarm words of support from government for diesel, weighed heavy on drivers' appetites to invest in traditional combustion engines.
"Alternative powered vehicles performed better but are still too small a slice of the overall market to make a significant impact.
Apperley also warned that Brexit uncertainties are leaving businesses with "little clarity of what the future holds".
"Manufacturers have shown recently that they are still willing to invest, and to prioritise the electric powered vehicles of the future. What they really need is greater clarity around the benefits of today's cleaner engines, and around their ability to export in the years to come," he said.
UK car production, June 2018