Car production plummets in UK amid pingdemic and chip shortage
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The Society of Motor Manufacturers and Traders (SMMT) has reported that car production dropped dramatically in July, citing ongoing staff shortages associated with the ‘pingdemic’ and the ongoing shortage of semiconductors.
Production is 18.3 per cent higher than it was in the heights of the pandemic, but is 28.7 per cent below 2019’s pre-pandemic manufacturing levels. Notably, production plummeted last month, which saw the production of 53,500 cars: a fall of 37.6 per cent on the same month last year. The industry group said that this is the worst July performance since 1956 when 51,472 cars were produced.
Summer factory shutdowns also impacted production, which fell by 38 per cent for the UK market (8,233) while manufacturing for export fell 37.2 per cent (45,205). Exports accounted for more than eight in 10 vehicles built in July.
The SMMT cited staff shortages due to the high volume of people requested to go into self-isolation (being 'pinged'), which has forced some factories to shift their summer shutdown timetables. It also pointed to the ongoing global shortage in semiconductors as a cause for concern.
The chip shortage has forced Ford, Jaguar Land Rover, Volkswagen, General Motors, Nissan, Daimler, BMW, Renault and recently Toyota to shut factories, scale back production or exclude high-end features such as integrated satellite navigation systems which rely on sophisticated semiconductor technology. In June, Intel CEO Pat Gelsinger warned that it could take many years for the shortage to be resolved as supply chains struggle under the “explosive growth” in semiconductor demand.
Trade group CEO Mike Hawes commented: “These figures lay bare the extremely tough conditions UK car manufacturers continue to face. While the impact of the pingdemic will lesson as self-isolation rules change, the worldwide shortage of semiconductors shows little sign of abating.
“The UK automotive industry is doing what it can to keep production lines going, testament to the adaptability of its workforce and manufacturing processes, but government can help by continuing the supportive Covid measures currently in place and boosting our competitiveness with a reduction in energy levies and business rates for a sector that is strategically important in delivering net zero.”
On a more positive note, 26 per cent of cars produced in July were alternatively fuelled (battery electric, plug-in hybrid or hybrid electric) - the highest share yet. 126,757 alternatively fuelled cars have been produced in the UK so far in 2021.
Richard Peberdy, UK head of automotive at KPMG, said: “Car-makers will be cursing a mix of factors stifling their ability to produce more vehicles, namely materials and labour shortages and increases to shipping costs. Manufacturers are absorbing the costs for now, but we could soon see price rises being passed on to consumers should problems persist, which runs the risk of dampening the sales recovery.
“Many car-makers find themselves in a bind between electric vehicles (EV) and traditional combustion engines. Despite some encouraging EV uptake among consumers, regular petrol cars are still popular because of their lower price point, with some remaining wariness over EV technology and reliance on charging.”
“We can expect more calls from the industry for further government support to help produce the vehicles that will drive us towards a net-zero carbon future.”
While EV ownership is skyrocketing across the UK – with new registrations up 117 per cent this year, compared to 2020 – people living in urban centres, high-rise flats and council estates are significantly less likely to have access to a private driveway, making it difficult to install home-charging solutions.
A new programme to address the mismatch between EV ownership and access to charging points is being trialled in the London Borough of Lambeth. The scheme, in the London Borough of Lambeth, will deploy public electric vehicle (EV) charging in areas that are underserved.
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