UK car production hits 12-year first-quarter high

Cars rolled off British production lines at the rate of one every 16 seconds in March, pushing UK car manufacturing to a 12-year high for a first quarter.

UK factories produced 443,581 cars in the first three months of the year, up 10.3% on same quarter last year, according to the Society of Motor Manufacturers and Traders. It was the strongest first-quarter performance since 2004.

Mike Hawes, chief executive of the SMMT, said the UK’s reputation as a good place to make cars was helping to increase investment and productivity in the industry.

He added: “We are on a trajectory to reach record levels of car manufacturing by 2020.”

Industry forecasts suggest the previous annual production record of 1.9m cars, set in 1972, would be broken within four years, slightly later than previously expected. Hawes said that to reach such a level output would require the creation of about 37,000 jobs.

He added that the appetite for British-made cars was increasing abroad, partly as demand recovers in Europe. About three-quarters of the cars built in UK factories in the first three months of this year were exported.

“Much will depend on economic and political conditions in key markets but, with several brand new global models starting production here in the first quarter alone, the prospects for future growth look bright,” Hawes said.

Companies committed to invest a total of £2.5bn in UK car production last year alone, he said.

This year Aston Martin announced it would open a new factory in south Wales, creating more than 750 jobs.

The luxury car maker plans to build its new DBX crossover model at a plant in St Athan from 2020. This followed a global search for a new manufacturing facility.

Major UK car plants include Nissan’s factory in Sunderland, the Mini factory in Oxford and Toyota at Burnaston in Derbyshire.

The strong car manufacturing figures – which showed a 9.8% jump to 159,074 vehicles in March – were at odds with data for the wider economy on Wednesday.

The Office for National Statistics said UK growth slowed to 0.4% in the first quarter of 2016, from 0.6% in the previous three months. Manufacturing output fell by 0.4% over the period.

Hawes said that should the UK vote to leave the EU, the effects in the UK car industry would be felt over the medium to longer term, rather than the short term, because of the lengthy product cycles.

“The industry has been very successful and the referendum is clearly going to deliver a period of uncertainty,” he said. “The concern would be for the medium to long term. If we leave and it adds to costs, that would make the UK less competitive.

“We have been hugely successful and we don’t want to jeopardise that success.”

The trade body said productivity in UK car manufacturing was at record levels. Referring to data from the SMMT and the ONS, it said figures for 2015 showed that each worker generated on average £79,700 a car produced, up 1.3% on 2014. This was the highest on record, and abound twice the UK national average.

Hawes said that with investment came innovation in processes, leading to greater efficiency and competitiveness, and higher levels of productivity.