Dearth of Chips Drives UK Car Production to Lowest Since 1956

January 28, 2022Updated: January 28, 2022

LONDON—British car production last year fell to its lowest since 1956, largely due to a global shortage of semiconductor chips that caused automakers to slow or shutter plants while waiting for parts, an industry group said on Thursday.

The Society of Motor Manufacturers and Traders (SMMT) said production fell 6.7 percent from 2020 to 859,575 vehicles and was 34 percent below the pre-pandemic year 2019.

“Overall, this was a deeply depressing year,” SMMT chief executive Mike Hawes told reporters. “The impact of the semiconductors really hit home hard in the last quarter of last year.”

The SMMT said it expected the shortage to ease this year and cited independent production forecasts that British car output should increase 19.7 percent to above 1 million vehicles.

The pandemic-fueled shortage of chips, used in everything from brake sensors and power steering to entertainment systems, has led automakers around the world to cut or suspend production, pushing up both new and used vehicle prices amid robust demand from consumers.

The overall fall in British car production was also partly caused by the long-planned closure of Honda’s vehicle plant in Swindon.

One bright spot was that Britain’s electric vehicle production rose 72 percent last year.

The SMMT said earlier this month that fully-electric BEVs accounted for 11.6 percent of sales in 2021— more than the cumulative sales for 2016 to 2020.

Hawes said that while the government’s Brexit deal had resulted in additional costs in 2021 for carmakers to handle increased bureaucracy in trade with the European Union, the industry had avoided the tariffs that would have accompanied a “no deal” rupture with the economic bloc.

By Nick Carey

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