Chip shortage and pingdemic drive UK car production to lowest levels in 65 years

Industry reports its worst month since the mid-20th century as global and local issues hit factories

Thursday, 26th August 2021, 3:42 pm

Car production in the UK fell to its lowest level since 1956 last month as the industry was hit by a combination of staff and component shortages.

Fewer than 53,500 cars were built in July, a 37.6 per cent drop on the same month in 2020, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

The industry body said that the effects of a global shortage of semiconductors had been exacerbated by large numbers of workers being forced to self-isolate as a result of the so-called “pingdemic”.

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Mike Hawes, chief executive of the SMMT, said that while the effects of the pingdemic appeared to be easing in the UK, the component shortage was an ongoing problem for the industry in the UK and further afield.

Some factories have brought foward summer shutdowns to lessen the impact of staff and part shortages (Photo by Leon Neal/Getty Images)

He said: “These figures lay bare the extremely tough conditions UK car manufacturers continue to face.

“While the impact of the ‘pingdemic’ will lessen 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.”

Car production is still 18 per cent higher than in 2021 but more than 28 per cent down on 2019 levels.

In July, more than a quarter (26 per cent) of all cars produced were alternative fuel vehicles - either EVs, plug-in hybrid or full hybrid, meaning that UK factories have produced almost 127,000 since the start of 2021.

Jim Holder, editorial director of What Car?, said: “The industry crisis surrounding new car production is deepening as the microchip shortage continues. Though July is typically a quiet month for the sector, this month’s results show just how drastic things have become.

“For new car buyers, this means longer waiting times on certain models and fewer options to choose from, at a time the industry should be on the bounce following months of Covid restrictions.

“Estimates suggest it won’t be until early 2022 before the supply constraints ease and production levels recover. Until then, manufacturers have to manage customer demand and expectations.”

One in four cars built in July was an EV or hybrid

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.”