Supply chain chaos hits Britain's car production in first half of this year

Car production in the United Kingdom declined in the first six months of the year as manufacturers continue to battle with global supply chain problems.

Figures published by the Society of Motor Manufacturers and Traders, or SMMT, showed nearly 96,000 fewer vehicles were built compared with the first half last year, which is worse than in 2009 when the global financial crisis choked demand.

The trade body warned that UK car manufacturers will not be able to produce 1 million vehicles a year until 2025, two years later than expected, due to factors such as the conflict in Ukraine, and the continued shortage of semiconductor chips and other crucial parts.

The data shows British factories built just over 403,000 units in the first half, which is a production rate that would bring a loss of 113,000 sales this year, the SMMT said.

The Financial Times cited a forecast from AutoAnalysis that predicted factories would only make 866,000 cars this year, which is a fraction more than last year but lower than its previous forecast from March.

The FT noted that Jaguar Land Rover now has an order book of 200,000 vehicles, the highest in its history, and that it blamed slow production on shortage of parts.

Despite the challenges, supply chain shortages were beginning to ease, said the SMMT, noting that UK car production was up 5.6 percent last month with nearly 73,000 units built.

It said this was the best June performance since the start of the COVID-19 pandemic, but that output remains 33.2 percent below 2019 levels.

Mike Hawes, the SMMT's chief executive, said the industry was suffering from ongoing issues caused by pandemic.

"Car manufacturers have been suffering from a 'long COVID' for much of 2022, as global component shortages undermine production and put supply chains under extreme pressure," he said in a news release.

Hawes said there are also concerns within the industry over possible delays caused by new regulations introduced after Brexit, reported The Guardian newspaper.

"Key model changeovers and the closure of a major plant last year have also impacted output, but there are grounds for optimism with rising output over the last two months.

"As these issues recede over the next year or two, investment in new technologies and processes will be essential but this will depend on our underlying competitiveness," he said.

The FT noted that the SMMT wants the UK to make 2 million electric vehicles a year by 2040. Hawes said this would require additional businesses to open sites as well as new battery factories.

"Sky-high energy costs, non-competitive business rates and skills shortages must all be addressed if we are to build on our inherent strengths and seize the opportunities presented by the dash for decarbonized mobility," he said.