Automotive manufacturing within the UK final 12 months fell to its lowest degree since 1956, in accordance with figures from the Society of Motor Producers and Merchants.

The SMMT stated the figures have been dismal, largely due to a world microchip scarcity and disruption brought on by the coronavirus pandemic.

It stated there was optimism for the longer term, with the announcement of recent funding price almost £5bn.

But it surely warned excessive vitality prices could possibly be a problem for carmakers this 12 months.

Hopes that automobile manufacturing would recuperate in 2021 have been firmly dashed. In response to the SMMT’s figures, just below 860,000 new automobiles left UK factories final 12 months.

That was even fewer than in 2020, when the primary wave of Covid and the related lockdowns compelled a number of factories to shut.

Manufacturing final 12 months was 6.7% decrease than in 2020 – and a full 34% under its pre-pandemic degree.

The principle purpose for the decline, the SMMT stated, was a extreme scarcity of semiconductors, or pc chips.

A contemporary automobile has complicated electronics and may use between 1,500 and three,000 chips to function objects comparable to engine administration programs, emissions controls, security units and navigation programs.

However there have been different components affecting manufacturing too. These included widespread workers absences as employees have been compelled to enter isolation, and the impression of the closure of Honda’s manufacturing facility in Swindon.

The SMMT’s chief government Mike Hawes admitted it had been “a dismal 12 months, there isn’t any hiding it”.

However he urged that “regardless of this depressing 12 months there may be optimism”, largely due to the announcement of £4.9bn in deliberate new investments, a lot of them in electrical autos or expertise.

These, he stated, had been triggered by the signing of a Brexit cope with the EU, which had supplied “an actual shot within the arm”, following 5 years of declining funding.

However he added the UK was “nonetheless taking part in catch-up” after an extended interval of Brexit-related uncertainty.

“The trade did the whole lot it might to be ready [for new post-Brexit trading arrangements], and largely that has been comparatively clean,” he advised the BBC’s As we speak programme.

“It has incurred further prices although, as a result of while we have been capable of profit from the deal now we have with the EU, which avoids tariffs, it would not keep away from different tariff obstacles and extra administration which has required further folks and extra prices to everybody, whether or not you are exporting or importing.”

For the UK motor trade, the pandemic got here at simply the unsuitable time.

Automotive manufacturing was already falling, and Brexit uncertainty was making producers reluctant to spend money on Britain – at a time after they have been making large plans for a brand new era of electrical autos.

The commerce cope with the EU solved that drawback – nevertheless it got here in the course of a Covid outbreak which triggered a wave of recent points.

The scarcity of pc chips is international and producers world wide have been struggling to cope with it.

However at a time when the UK automobile trade ought to have been specializing in making up misplaced floor, it was left managing a disaster. The previous 12 months has been really depressing for the sector.

However, new funding is now coming in, and that momentum now needs to be sustained if the UK is really to turn out to be a power within the new marketplace for electrical autos.

Regardless of the overall malaise within the trade, in the meantime, manufacturing of electrical and hybrid automobiles rose by almost 30% – and accounted for almost 1 / 4 of all of the automobiles constructed.

Van manufacturing, which is turning into an more and more necessary a part of the UK motor trade, was additionally robust, with output recovering to simply 3% under its pre-pandemic degree.

Demand for these autos has been hovering because of the reputation of on-line buying and residential deliveries.

Impartial forecasts produced for the SMMT counsel that manufacturing will rise by almost 20% subsequent 12 months, to a couple of million autos.

However the organisation stated that until new gamers come into the market, the trade is unlikely to return to the output ranges seen 5 years in the past, when some 1.7 million automobiles left UK factories.

That’s because of the closure of Honda’s Swindon plant, and the choice to make vans as an alternative of automobiles at Vauxhall’s manufacturing facility in Ellesmere Port.

The chip scarcity, in the meantime, is anticipated to stay an element within the first a part of this 12 months – however turn out to be simpler after that.

Nonetheless, the trade is more likely to face one other, very vital problem: quickly rising vitality prices.

“Escalating vitality prices threaten the viability of auto crops, but in addition our aggressive place,” Mr Hawes stated.

“We already pay extra in vitality prices right here within the UK than in competitor nations throughout Europe and past.

“So we’d like to verify we are able to attempt to mitigate these value rises to make sure we are able to stay aggressive.”