British car production declined for the eighth month in a row in January as output bound for China plunged by more than 70%.
The car industry is struggling with multiple headwinds, including falling demand in China, a regulatory backlash against diesel vehicles in Europe and continued uncertainty over Brexit, which has put the brakes on investment in the UK.
The sharp fall in production in January was mainly driven by the slowdown in production for export. Output bound for China dropped by 72.3% compared with 2018 – the biggest fall on record – according to figures published on Thursday by the Society of Motor Manufacturers and Traders (SMMT), an industry lobby group.
Output for European markets fell by one-fifth. British factories produced 120,649 cars in total during the month, down by 18.2% on January 2018.
The fall in Chinese demand has been cited by multiple European carmakers for declines in production in recent months, after car sales in China fell during 2018 for the first time in almost 30 years.
Jaguar Land Rover, the UK’s largest carmaker, announced 4,500 job cuts last month, blaming a mixture of Brexit, the fall in diesel demand and China. Last week, Honda said it would close its only factory within the EU, in Swindon, in 2021, with the loss of at least 7,000 jobs at the plant and in its supply chain.
Mike Hawes, the SMMT’s chief executive, said: “The industry faces myriad challenges, from falling demand in key markets to escalating global trade tensions and the need to stay at the forefront of future technology.”
Manufacturing for the British market, accounting for just over one-fifth of production, fell by 4.8% year on year in January.
The SMMT blamed low consumer confidence in light of continued uncertainty over Brexit for this decline, with less than 30 days until the planned date of departure and the possibility of a no-deal Brexit looming.