Car production in the UK fell to its lowest level since 1956 due to global microchip shortage and disruption amid Covid-19

According to the figures shared by the Society of Motor Manufacturers and Traders, car production slammed down to the lowest level in the past 65 years in the UK.

The SMMT stated that the figures were not satisfactory which is because of coronavirus pandemic and microchip shortage.

It also stated that the investment of a net of £5bn is optimistic for the future in the production of vehicles.

It also warned the carmakers that this year they will face a significant increase in the energy cost as well.

It hoped that the manufacturing cost of the car production would be covered in 2021, but all went in vain. Only 860,000 cars were left in the factories last year according to the figures submitted by SMMT.

The figures shared are even less than the figures cited when the first wave of the Coronavirus hit the country in 2020 amidst forced factories closure and lockdowns.

The car production last year was reduced to 6.7% from 2020 and to 34% lower from the pre-pandemic level.

Chip Shortage

SMMT blamed the shortage of computer chips or semiconductors as the reason for the decline. A car with a modern and complex electronics system would require around 15000-3000 microchip conductors to appropriately function installed software like emission controls, engine management systems, navigation systems, and safety devices.

But this not only can be the reason for the shortage of the car production but also the unavailability of the staff due to isolation or it can be the closure of the Swindon Honda factories.

The chief executive SMMT, Mike Hawes admitted that “2021 had been a dismissal year, there’s no holding it”.

The chief added that the UK was “still catching up” even after the occurrence of Brexit uncertainty.

“The industry did everything it could to be prepared [for new post-Brexit trading arrangements], and largely that has been relatively smooth,” he told the BBC’s Today programme.”

“It has incurred additional costs though, because whilst we were able to benefit from the deal we have with the EU, which avoids tariffs, it doesn’t avoid other tariff barriers and additional administration which has required additional people and additional costs to everyone, whether you’re exporting or importing.”

However, the chief is still optimistic about the investment coming in and believes that the UK will sustain the momentum if it truly works to produce the electric vehicles for the market.

Future of the Electric vehicles in the UK

Despite the vehicle industry facing malaise in the past, the production of the electric vehicle rose to 30% accommodating nearly a quarter of the built cars.

 Where the van production is becoming an essential part of the UK motor industry with an output of 3% which is quite below its pre-pandemic level.  This increase has been seen because of the increase in online shopping and home delivery attractiveness.

This foresees the rise in production of the vehicles up to 20% which is more than 1 million vehicles. However, the vehicle industry will be facing the challenge of rapidly increasing costs.

“Escalating energy costs threaten the viability of vehicle plants, but also our competitive position,” Mr Hawes said.

“We already pay more in energy costs here in the UK than in competitor countries across Europe and beyond.

“So we need to make sure we can try and mitigate those price rises to ensure we can remain competitive.”