UK Car Production Skyrockets by 16.8% in 2023

The Society of Motor Manufacturers and Traders (SMMT) in the UK reported on January 25, 2024, that the number of cars produced in 2023 had increased by 16.8% compared to the previous year, reaching 905,117. This is the first time in seven years that the annual performance has exceeded the last year, despite the disruption of supply chains due to the COVID-19 pandemic. The UK car industry has been in a slump and has shown clear signs of recovery with continuous investments in electric vehicles (EVs).

Mike Hawes, the chairman of SMMT, commented on the 2023 performance that surpassed the previous year for the first time in seven years, saying, “It was a year that deepened our confidence in the future.”

The production volume included a 14% increase to 191,247 units for the UK market and an 18% increase to 713,870 units for export. Electrification is also steadily progressing. The sales volume of electrified vehicles, including battery, plug-in, and hybrid electric vehicles, increased by 48% to 346,451 units. Battery electric vehicles accounted for 314,687 units, an increase of 18%. The market share of battery electric vehicles was 17%.

UK car production decreased for six consecutive years until 2022 and recorded the lowest level in 66 years since 1956.

However, the atmosphere in the industry changed as the movement towards electrification centered on battery-electric vehicles accelerated, along with the recovery of total sales in 2023. The UK government’s subsidy support in 2023 highlighted the will to invest in electric cars.

Nissan announced in November that it would invest an additional 2 billion pounds ($2.7 billion) in its main base, the Sunderland plant in Northern England. BMW is also investing over 600 million pounds ($813 million) in its UK plant to produce new electric vehicles. The Tata Group from India is investing 4 billion pounds ($5.4 billion) in constructing a car battery plant.

SMMT predicted that the production volume of about 900,000 units in 2023, approximately 70% of the pre-COVID level of 1,303,135 units in 2019, would continue to grow this year.

The UK has strong aspects as a supply base for the European continent, but there are negative factors such as transportation costs, exchange rates of the pound, and high labor costs. It’s not necessarily suitable for car production. As the closure of Honda’s Swindon plant in 2021 showed, the general trend has been a decline in industrial competitiveness. It’s unclear whether the UK car industry can revive, even though it’s recovering.