Fears UK car industry may never recover as production lines close

Britain’s automotive industry may never recover from the coronavirus crisis, experts have warned, after car plants responsible for two-thirds of the UK’s annual vehicle output paused assembly lines.

BMW and Toyota joined a rapidly lengthening list of carmakers shutting down European operations on Wednesday, leaving Honda and Jaguar Land Rover as the only large firms still operating their UK plants.

The latest closures mean the coronavirus outbreak has temporarily stopped the production lines at plants that employ about 17,000 workers and make around 900,000 of the UK car industry’s annual output of 1.5m vehicles.

As the pandemic brought the automotive industry grinding to a virtual halt, the Society of Motor Manufacturers and Traders’ (SMMT) chief executive, Mike Hawes, warned that the industry “stands on the precipice”.

Automotive experts are voicing concerns that the UK car industry, which was already struggling to avert decline, may not be able to regain lost ground, even once the outbreak is over.

“Last year, with the uncertainty over Brexit, the shift away from China [amid falling sales] and diesel, it was the perfect storm. This is perfect storm part two,” said Professor David Bailey of Birmingham Business School.

“As assemblers [manufacturers] shut down, it has a cascade effect on the supply chain and some of those firms will have to start shutting down too.

“The fear is a scarring effect on the industry. If capacity is lost because of shutdowns, the longer that they go on, the more there is likely to be a permanent impact on an industry that has already been struggling.”

Prof Karel Williams at Manchester Business School said it was likely the UK car industry would emerge from the coronavirus crisis smaller than it otherwise would have been.

“It’s clear from what Volkswagen has been saying that lost sales will not be found again and there will be a massive hit in terms of loss-making in the major carmakers,” he said.

“The markets will recover but the companies will be weakened just when they’re requiring large-scale investments in electrification. That will force them to rethink their portfolios of factories, models and markets.”

He said existing weakness in the UK auto sector meant firms may sacrifice their British operations to aid their long-term recovery.

“The review of factories, models and markets is not going to be good for the British car industry,” Williams said. “The last thing the industry needs is a major disruption to both demand and supply. The more marginal the operations, the model and the market, the more likely things are to be cut.”

About 17,000 UK car workers have been sent home temporarily across the industry as Nissan, the Mercedes-Benz parent, Daimler, Volkswagen, Ford, Fiat and Peugeot have announced suspensions of their European output. Jaguar Land Rover kept its UK sites operating but has frozen output at its Slovak factory.

BMW and Toyota followed suit on Wednesday, extending the roster of factories that would normally make millions of cars every year but are on pause for the time being.

The suspensions will affect BMW’s Mini plant at Cowley in Oxfordshire and Toyota’s plant at Burnaston in Derbyshire. The two sites employ more than 8,000 people and produce more than 350,000 cars between them annually.

UK manufacturers to regear factories to build ventilators for NHS

“From today, we will shut down our European car factories and the Rosslyn factory in South Africa,” BMW’s chief executive, Oliver Zipse, said, adding that the interruption was expected to last until 19 April.

BMW, which makes Minis at its Cowley, said its profits this year would be significantly lower, given that it was shutting factories that accounted for half of the 2.6m cars it built in 2019.

Toyota said it had stopped output at more of its plants in Europe and Asia as the spread of the coronavirus prompts countries to instruct non-essential businesses to suspend operations. Its factories in Poland, the Czech Republic and Turkey will also be affected.

Jaguar Land Rover, which has plants at Castle Bromwich, Solihull and Halewood, said it was following government advice, including staggered shift patterns and working from home where possible but had not yet decided to stop work at UK factories.

“All of our UK plants remain open and we plan to keep building cars until at least the end of the week, subject to the ongoing supply of parts,” the company said. “We will continue to closely monitor and review the situation as it evolves.”

However, it will suspend work at Nitra, Slovakia, although some staff will remain to support the launch of the Land Rover Defender.

Fresh suspensions at BMW and Toyota come a day after Nissan closed its Sunderland factory, Britain’s biggest car plant – joining the aerospace giant Airbus in ceasing production.

The Japanese carmaker, its US rival Ford and Germany’s Volkswagen cited global economic turmoil that has choked off demand, as well as concerns about workers’ safety.

Nissan’s decision means work will stop at its Sunderland factory, which employs 6,000 staff and produces about 440,000 vehicles a year.

Automotive firms with operations in the UK have been examining ways they can assist with a drive to manufacture 20,000 ventilators to help treat coronavirus patients.

Vauxhall, owned by PSA Group, has said it can 3D-print parts for the medical devices and even assemble them at its Ellesmere Port plant, making use of excess capacity created by a freeze in production there.

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