[AUTO] Special report: Covid-19 and the future of the UK car industry

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The car industry is used to having huge challenges thrown at it. Legislators have long been setting aggressive targets around cutting tailpipe emissions to improve air quality, speeding up the hugely expensive development of electrified technologies in the process. Political issues such as the US-China trade war and, of course, Brexit have brought uncertainty to buyers and markets and hurt bottom lines. And all the while, buyers have been demanding ever-more sophisticated cars and technology with little willingness to pay more for it.Yet however high car makers have been asked to jump in recent years, they’ve managed to do so. But all this was before the latest challenge to hit the industry: Covid-19. And, as we’ll discover, it’s probably the biggest that the industry has ever collectively faced, touching all corners of the market all over the world, while none of those existing problems have gone away.Over the next two weeks, we'll be publishing a series of reports looking at the biggest issues faced by car makers at the moment. We'll keep this page updated with new articles, and all of them can be found on our industry news page.Coronavirus and the car world: latest updatesProduction lines came to a complete halt globally. Car sales have collapsed to zero or near-zero in many of the major markets. Oil prices have dramatically fallen. Millions of jobs have been lost. Economies have contracted by record amounts. Consumer confidence has all but evaporated. International borders have been closed. Each is a big problem on its own; collectively, the impact is unprecedented.Here, we attempt to analyse just what impact all of this will have on the British car industry – and find that, among all the bad news, there is hope and, in many cases, optimism that there remains light at the end of the tunnel.Just what are we facing?Remember Brexit? For years, the UK’s departure from the European Union was the only topic in the British car industry. Uncertainty over future UK-EU trade affected investment, contributing to job cuts and plant closures – and putting the future of several more British factories in doubt. To an industry already struggling with falling sales and the need to invest heavily in new technology, Brexit was, apparently, the biggest threat in decades.

Perspectives change fast, eh? The damage wrought by this pandemic to the worldwide car industry in just five months makes Brexit seem positively trivial. Industry leaders must be nostalgic for the heady days of fretting about tariff-free trade. February seems a lifetime ago.

Ultimately, Covid-19 is a health crisis, one that has already claimed more than 300,000 lives worldwide, with millions of people affected by illness or the effects of lockdowns. The social and economic impacts have been huge as well.

As lockdown measures were introduced to slow the spread of the disease, virtually every car factory worldwide had to suspend production. Dealerships also shut, prompting sales to slump. In the first four months of 2020, global car sales fell by 29.2% year on year. In Europe, lockdown restrictions beginning in March massively hit sales in April: they were down 80%. In the UK, sales fell by 97% in April. With dealerships shut until June, May will be just as bad. Analysts don’t expect demand to recover for the rest of 2020 – possibly longer.

The impact on car production in the UK has also been huge: from March until mid-May, when some restrictions in England were eased, it’s estimated that 240,000 vehicles were lost and at least 64,500 employees affected, many of them furloughed.

Even as the lockdown begins to ease, the future is uncertain. Social-distancing requirements are forcing firms to rethink the way they make cars and will inevitably slow lines. It’s unclear how long it will take for sales to recover, and the financial impact of the lockdown will be felt industry-wide.

 

 

Edited June 3, 2020 by Dr.Drako
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