Vehicle manufacturing in the United Kingdom continued to improve during September. According to the latest data published by the Society of Motor Manufacturers and Traders (SMMT), UK passenger car output increased by 9.9% year on year (y/y) to 140,888 units in the month. This has helped lift the year-to-date (YTD) figure for this category further into positive territory, with an increase of 3.9% y/y to 1,125,433 units. However, the trade association also reported that commercial vehicle output slid by 27.5% y/y to 6,963 units last month, meaning that output in the YTD has now fallen by 17.9% y/y to 67,609 units.
Significance: Passenger car demand has offset the declines in commercial vehicle output caused by the closure of Ford's Southampton light commercial vehicle (LCV) site at the end of July and the sluggishness of commercial vehicle demand in Europe as a whole. Passenger car production was driven last month by a combination of shipments for export and domestic demand. This trend, which appears to be an ongoing one, alongside the ongoing investment in the United Kingdom by Nissan, BMW, Jaguar Land Rover (JLR), Volkswagen (VW) Group and General Motors (GM), presents a strong foundation for further gains in future. IHS Automotive anticipates that passenger car production in the country will in the final quarter result in flat full-year output of around 1.46 million, as the ramp-up of the third-generation Mini and second-generation Nissan Qashqai takes place. Growth will return in 2014, though, and more substantial gains are anticipated during the second half of the decade. LCV output will be hampered by the withdrawal of Ford, though, falling by around one-third compared with 2012 and to one-third of the levels seen in 2007. We do not see production of this type of vehicle breaking far through the 60,000-unit-per-annum barrier in future.
