UK Production 2018 Analysis

Can UK car manufacturing get itself out of the woods? Not soon anyway

A few years ago some (remaining nameless) felt the sky was the limit for UK vehicle manufacturing. I wasn't so optimistic. CV production was ridiculously poor with no obvious way of fixing that. Nissan was the main producer and it was running at capacity. JLR was growing fast but needed more UK capacity to increase the numbers and the company instead committed itself to new offshore plants.

Further down the line, neither Toyota nor Honda had any plans to increase production substantially. GM was toying with reducing or ending its involvement altogether. The MINI plant was fully utilised and there was no way to expand on its present site. The rest are too small to have much impact on volume. You can see my bemusement at the optimism.

So how did it pan out? It's now looking even worse that my assessment. Here are some reasons:

Nissan is pulling back on volume in Europe; presumably they were putting unit sales over margins.

Land Rover decided to take all capacity expansion offshore, including production of new models. The UK was making all models that were later in their life cycle and then pressure on diesel engines in Europe coupled with a sales drop in China left the UK with too much capacity. UK production has to be cut back quite drastically.

Toyota's UK production continues like a rudderless ship, at least from what I can see. The new owner of Opel/Vauxhall PSA has cut back slightly but it could have been worse. The rest are doing OK.

So let's put all of this into some 2018 data. Bear in mind its too early to put production by car maker into figures so we are talking totals here.

Vehicle Production (thousands, so add three zeros):

Domestic v Export + Totals
	2018	%	2017	%	2016	%	2015	%	2014	%	2013	%
Passenger Car Production
Local	282	19	337	20	373	22	360	23	333	22	308	20
Export	1,238	81	1,335	80	1,349	78	1,228	77	1195	78	1,201	80
Total	1,519		1,672		1,722		1,588		1528		1,509
CV Production
Local	35	41	29	37	39	42	47	50	36	51	40	46
Export	50	59	49	63	55	58	47	50	35	49	48	54
Total	85		78		94		94		71		88
G Tot	1,604		1,750		1,816		1,682		1599		1,597

We can see here growth was increasing up to 2016, a slight dip in 2017 and that accelerated in 2018. 150,000 units of passenger car production disappeared in 2018! Commercial vehicles actually did a little better, but the tiny numbers had little impact. 

80% of UK production is exported. That sounds good and that does prove there is demand for UK made vehicles abroad. What makes it sound better is the apathy by locals. What do I mean?

It was in 1978 that UK passenger car production for the domestic pc market fell below 50% of sales for the first time and it has never gone back over the half way point since. UK pc production destined for home consumption has now reached a pitiful 11.9% in 2018. With no stomach for supporting 'UK made' at home, the industry has become almost totally reliant on exports. 

Engine Production (thousands, so again add three zeros):

Engine Production / Domestic v Export + Totals
	2018	%	2017	%	2016	%	2015	%	2014	%	2013	%
Local	1,032	38	1,234	45	1,125	44	907	38	1026	40	941	38
Export	1,683	62	1,488	55	1,421	56	1,487	62	1527	60	1,554	62
G Tot	2,715		2,722		2,546		2,394		2,553		2,495

As it turns out, this area has fared better. The domestic / export split is about 40/60, favouring the latter. One would expect a greater percentage of engines for export in 2019 as UK vehicle production continues to decline. 

Summary: It would be too easy to blame outside issues for the drop, especially ones that haven't happened yet. Nissan have a policy of cutting back on volume in Europe. JLR got over confident after a run of success and have had a big wake up call. 2019 will see a continued fall in production.