The recent happenings around the country have called for a nationwide lockdown. This measure has brought the automobile industry to a halt for a while. Since June however, there have been various efforts to make the sector start its full operations
This article takes a look at how COVID-19 has affected the UK automobile market. We would also examine the way forward since June.
Loss in Production, Stagnancy, and Brexit Tariffs
Production started in June in the UK with over 56,000 units manufactured. The figures are slowly improving due to social distance measures. A drop in demand also contributes largely to this slow rise in production.
While the figures are low, they are an improvement compared to April and May. In those two months, only 5,111 cars were produced. Numbers that low have not been recorded since 1954. According to the Society of Motor Manufacturers and Traders (SMMT), in May, the market was about 89% its size.
Since the start of the year, the number of cars built in the UK stands at 381,357. The present figures represent a total loss of about 285,164 vehicles in 2020 alone. This lockdown has dropped the market to 63.8% of its size.
More than 11,300 jobs from manufacturing, supply chains, and retail were lost to the pandemic. Many more are at risk due to fears of a possible increase in Brexit tariffs. A lot of questions lie around conditions trade. There are also concerns about customs; their procedures and their tariffs around the Brexit.
Increased Production of Vehicles
According to SMMT, the production of vehicles in the UK increased by 23.9% in June. A report dated 30th of July has it that a total of 4,144 cars were produced in June alone.
Even though production is starting to pick up, the severity of January till June still poses a threat. On the other hand, existing restrictions are also challenging for proper work.
The Chief Executive of SMMT Mike Hawes is quoted as saying: “Although growth in commercial vehicle manufacturing in June is undoubtedly good news, this does not indicate a return to business as normal. The sector remains almost 9,000 units behind 2019, which will be difficult to catch back given many plants are still operating at a reduced capacity.”
Implications and the Way Forward
The automotive industry of the UK ranks amongst the most significant assets of the country. The sector alone provides 820,000 jobs. Of these 820,000 jobs, about 20% (168,000) is involved in manufacturing. Unfortunately, 16% of these jobs are at risk of being lost across the nation. That is one person out of 6 is likely to lose their job across the country.
Before the start of the year, production was predicted to hit 2million in the UK in 2020. However, these figures are likely to reach a bit above half the original target. About 880,000 cars are expected to be produced this year in the UK.
That is about 30% less than the initial estimates before the lockdown. The year is on course to produce the least number of cars since 1954, due to disrupted market conditions caused by COVID-19.
SMMT estimates that for the industry to retain jobs in the UK, it needs about an £83 billion boost. This boost will cut across all aspects of the industry from manufacturing to sales. The lift is expected to improve international trade as well as increase tax revenues. It would also help the government meet its aims on climate change and air quality.
The automotive industry is recovering from the impacts of COVID-19 slowly. Even though at a slow pace, we are assured of total recovery by the end of 2020.
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