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UK passenger car production tumbles in January
UK passenger car production has tumbled by 18.2% year on year (y/y) during January, according to a statement released by the Society of Motor Manufacturers and Traders (SMMT). Output fell from 147,507 units to 120,649 units. Production destined for export markets slumped by 21.4% y/y to 93,781 units, while that set to remain in the UK slipped 4.8% y/y to 26,868 units. Commercial vehicle production jumped by 49.1% y/y to 9,182 units, as vehicles built for the domestic market almost doubled from 2,033 units to 4,014 units. However, vehicles built for export have grown by 25.3% y/y to 5,168 units.
Significance: This is the eighth consecutive monthly decline in passenger car production, and this has been another substantial retreat. The SMMT said in a statement that this reflects model changes and weaker demand from both domestic and exports. Indeed, there has been a notable drop in exports to China, with this having fallen by 72.3% y/y, although more importantly shipments to the other 27 markets in the EU have fallen by one-fifth this month. On the announcement, the SMMT's chief executive Mike Hawes said, "Another month of decline is a serious concern. The industry faces myriad challenges, from falling demand in key markets, to escalating global trade tensions and the need to stay at the forefront of future technology. But, the clear and present danger remains the threat of a 'no deal' Brexit, which is monopolising time and resources, undermining competitiveness." Nevertheless, UK commercial vehicle production has recorded a boost thanks to a number of large fleet orders and strong market incentives ahead of model changes. It remains to be seen what happens in the coming weeks and months to production for both passenger cars and LCVs in the build-up to and after the expected Brexit departure date of 29 March. We now anticipate UK passenger car production falling by almost 7% y/y to 1.41 million units and LCVs jumping by 37.8% y/y, although this assumes a non-hard Brexit situation.
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