U.K. Car Output Hits 6-Year High in 2013; CVs Slump

New-car production in the U.K. rose 3.1% in 2013 to 1,464,906 units, the highest volume since 2007, prompting predictions that output will reach record levels of about 2 million by 2017.

Society of Motor Manufacturers and Traders CEO Mike Hawes says the region could become Europe’s third-largest car producer.

“2013 demonstrated the value of the U.K.’s diverse car-manufacturing industry, as surging home demand and robust exports outside Europe saw output grow,” he says in a statement.

“U.K. automotive investment announcements exceeded £2.5 billion ($4.1 billion) in 2013, reinforcing industry analysts’ suggestions that the U.K. could break all-time car output records within the next four years.”

The U.K. saw production reach a record 1.982 million units in 1972 and SMMT cites forecasts from consulting company AutoAnalysis that suggest output will climb steadily over the next four years to match that figure in 2016 and then hit 2 million in 2017.

Business Secretary Vince Cable says the industry’s success lies in the appetite of buyers from around the world for British cars.

“(About) 80% of the 1.5 million cars we produced last year were exported – a testament to the diverse, high quality of British manufacturing,” he says in a statement.

SMMT data shows the build for the home market climbed 21.8% to 308,367 units last year, offsetting a 0.9% drop in exports to 1,201,395.

The year ended on a down note, with December production slipping 15.9% to 85,566 units as domestic output fell 11.4% to 15,075 and the export order slumped 16.8% to 70,491.

Hawes says that since 2009, the variety of cars produced in the U.K. has been underlined by a marked change in export destinations.

While the mainland European market has struggled with tough economic conditions, overall export volumes have been bolstered by strong growth in demand for U.K.-built cars in other locations.

“China’s share of exports has grown rapidly over recent years, and the country now looks set to become the largest non-EU market for U.K.-built cars,” SMMT says. “Take-up in the U.S. remained strong last year, and while Russia has seen volumes fall since 2012, it is now firmly established as a key export destination.”

The weak link in the U.K. production mix is commercial vehicles, with 2013 output tumbling 21.7% to 87,671 units as manufacturers faced low demand at home and in mainland Europe.

SMMT foresees little change in 2014.

“Production of commercial vehicles struggled in 2013, due to restructuring of manufacturing operations and difficult economic conditions across Europe,” Hawes says. “With early signs of recovery on the continent and better performance in the truck and bus sectors, there are reasons to be positive, but we expect overall volumes to remain subdued for some months yet.”

CV production for the home market declined 17.7% to 39,761 units, while the export book saw a 24.8% retreat to 47,910.

The segment’s woes were highlighted in December when the month’s output backslid 25.0% to 5,136 units as the build for the U.K. market plunged 69.3% to 1,014, more than enough to wipe out a 16.1% rise in export orders to 4,122.

U.K. engine manufacturing ended 2013 on an uptick thanks to domestic demand.

The full-year total was up 2.3% to 2,553,316 units, with the build for the home market climbing 9.0% to 1,026,050, offsetting a 1.7% drop in exports to 1,527,266.