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Gloucestershire Business News

'Chips' helps grease wheels for auto production

Car manufacturing output showed a 13.1% uptick in February, rising to 69,707 units.

UK volumes are up for both home and overseas markets – and while makers warn of 'crippling' energy costs, optimism can be drawn from the fact that exports drove an overall uplift.

Perhaps unsurprisingly, output on hybrid, plug-in hybrid and battery electrics has surged once again. They're up 72.2% and now accounting for two in five cars produced in the month.

Against this backdrop, a new Society of Motor Manufacturers and Traders (SMMT) member survey shows nine in 10 firms are demanding government measures to deliver low-cost, low-carbon energy to help support transition to zero-emission technologies.

Mike Hawes, SMMT Chief Executive, said: "February's growth in UK car production signposts an industry on the road to recovery. The fundamentals of the sector are strong; a highly skilled workforce, engineering excellence, a sector that is embracing new electrified vehicle manufacturing and wide ranging capabilities in the EV supply chain. To take advantage of global opportunities, however, we must scale up at pace and make the UK the most attractive destination for automotive investment by addressing trading and fiscal costs and delivering low carbon, affordable energy."

An SMMT spokesman added: "Shipments to the EU rose 6.5%, helping to offset declines to the US (-19.9%) and China (-21.6%), providing further evidence of the need for continued free trade across the Channel. Exports to Turkey, Japan, Australia and South Korea, meanwhile, also rose, collectively by 85.0%, and together represented a total of 6,498 cars, or 11.5% of exports."

With UK factory gates counting an additional 8,050 exiting cars, volumes were "buoyed by an easing of supply chain shortages – notably of semiconductors – which have bedevilled the global industry since the early months of 2021.

"Production for both home and overseas markets rose by double digits, up 20.3% and 11.5% respectively, with exports driving the overall uplift. 56,634 cars were produced to fulfil global orders, up from 50,786 a year before and accounting for 81.2% of output, with the majority of these exports (59.6%) heading into the UK's largest trading partner, the EU."

While automotive businesses are broadly optimistic about the next 12 months, the SMMT says more than eight in 10 report input and employment costs have risen in the past three months, "so action to alleviate cripplingly high and uncompetitive energy costs ranks as their number one concern".

"Support on business rates, easing supply shortages and access to trade are also all viewed as beneficial for growth."

Punchline says: Against the backdrop of SMEs being crushed beneath the wheels of the EU's export barriers, it's great to hear of trading success among the bigger boys. They have the resources and muscle to put into combatting such post-Brexit headaches. But for vital Gloucestershire businesses such as bike specialists Quella , the challenge remains immense .

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