Car industry is struggling for Five reasons

BBC - Debriefer
2019-07-06 | Since 1 Month

News that Ford plans to close its Bridgend plant next year, with the loss of 1,700 jobs, is just the latest in a series of blows for the UK car industry.

In February, Honda said it would close its Swindon plant by 2021, with the loss of about 3,500 roles, while Jaguar Land Rover and Nissan are also cutting production and jobs.

It comes as carmakers around the globe struggle with a range of challenges, while consumers are buying fewer cars.

So what's holding manufacturers back?

  1. Falling demand

After years of strong growth, global car sales were broadly flat in 2018, largely because of a slump in demand in the world's biggest market, China.

It has hurt carmakers who had been doing brisk business in China, says Dave Leggett, editor of the car industry website just-auto.

Nissan chooses Japan over UK to build new X-Trail car

Honda confirms Swindon car plant closure

"Trade tensions between Washington and Beijing have hit confidence in China generally. The economy was slowing down anyway, but that accentuated it," he says.

Jaguar Land Rover has blamed its poor performance recently on falling Chinese demand, while Ford has pulled plans to sell a Chinese-made Ford Focus in the US because of the impact of trade tariffs.

The Chinese slump comes as demand in two other giant car markets, Western Europe and the US, has also slowed amid waning consumer confidence.

"It is creating more competition, which makes it tougher for everyone," Mr Leggett says.

News that Ford plans to close its Bridgend plant next year, with the loss of 1,700 jobs, is just the latest in a series of blows for the UK car industry.

In February, Honda said it would close its Swindon plant by 2021, with the loss of about 3,500 roles, while Jaguar Land Rover and Nissan are also cutting production and jobs.

It comes as carmakers around the globe struggle with a range of challenges, while consumers are buying fewer cars.

So what's holding manufacturers back?

  1. Falling demand

After years of strong growth, global car sales were broadly flat in 2018, largely because of a slump in demand in the world's biggest market, China.

It has hurt carmakers who had been doing brisk business in China, says Dave Leggett, editor of the car industry website just-auto.

Nissan chooses Japan over UK to build new X-Trail car

Honda confirms Swindon car plant closure

"Trade tensions between Washington and Beijing have hit confidence in China generally. The economy was slowing down anyway, but that accentuated it," he says.

Jaguar Land Rover has blamed its poor performance recently on falling Chinese demand, while Ford has pulled plans to sell a Chinese-made Ford Focus in the US because of the impact of trade tariffs.

The Chinese slump comes as demand in two other giant car markets, Western Europe and the US, has also slowed amid waning consumer confidence.

"It is creating more competition, which makes it tougher for everyone," Mr Leggett says.

News that Ford plans to close its Bridgend plant next year, with the loss of 1,700 jobs, is just the latest in a series of blows for the UK car industry.

In February, Honda said it would close its Swindon plant by 2021, with the loss of about 3,500 roles, while Jaguar Land Rover and Nissan are also cutting production and jobs.

It comes as carmakers around the globe struggle with a range of challenges, while consumers are buying fewer cars.

So what's holding manufacturers back?

  1. Falling demand

After years of strong growth, global car sales were broadly flat in 2018, largely because of a slump in demand in the world's biggest market, China.

 

It has hurt carmakers who had been doing brisk business in China, says Dave Leggett, editor of the car industry website just-auto.

Nissan chooses Japan over UK to build new X-Trail car

Honda confirms Swindon car plant closure

"Trade tensions between Washington and Beijing have hit confidence in China generally. The economy was slowing down anyway, but that accentuated it," he says.

Jaguar Land Rover has blamed its poor performance recently on falling Chinese demand, while Ford has pulled plans to sell a Chinese-made Ford Focus in the US because of the impact of trade tariffs.

The Chinese slump comes as demand in two other giant car markets, Western Europe and the US, has also slowed amid waning consumer confidence.

"It is creating more competition, which makes it tougher for everyone," Mr Leggett says.

  1. Brexit

In the UK, car firms have been warning repeatedly of the dangers of a no-deal Brexit since the EU referendum in 2016.

And investment in the UK car industry has fallen in the last two years, slumping 46.5% in 2017 alone.

The problem, analysts say, is that British car plants rely heavily on components imported from the EU, while most of the finished cars they produce are exported to the European mainland.

"If we are going to have uncertainty in the form of tariffs, then that will cause bottlenecks and delays which will make UK plants less economic," says Dr Owens.

However, Mr Leggett stresses Brexit is only one of many factors troubling the UK industry.

"Firms are seeing lower exports to China, and sluggish sales in Europe. The UK economy isn't that buoyant at the moment too."

 


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