December 21, 2017 / 12:02 AM / 3 years ago

UK car output falls in November as domestic demand slumps

FILE PHOTO: A man works on the production line at the Toyota factory in Derby, central England, March 7, 2011. REUTERS/Darren Staples/File Photo

LONDON (Reuters) - British car production fell 4.6 percent in November due to a nearly 30 percent drop in year-on-year domestic demand, which an industry body blamed on uncertainty over Brexit and diesel taxation.

A total of 161,490 vehicles rolled off British production lines last month, with demand at home falling 28.1 percent compared with a 1.3 percent rise in exports, accounting for 85 percent of all production.

Year-to-date volumes stand at 1,577,042 units, down 2 percent on the first 11 months of last year, according to data released by the Society of Motor Manufacturers and Traders on Thursday.

The trade body had once hoped that 2017 would be the year the industry beat the all-time high of 1.92 million cars set in 1972 but has since scaled backed exceptions, now anticipating full-year volumes to be flat at 1.73 million units.

Carmakers are worried their vehicles could be hit with tariffs and customs checks after Britain exits the European Union in March 2019, endangering the viability of plants, though the government has promised to safeguard “frictionless” trade.

Months of uncertainty over whether the British government would increase taxes on diesel cars has seen demand in the segment collapse, down 16 percent so far this year.

“Brexit uncertainty, coupled with confusion over diesel taxation and air quality plans, continues to impact domestic demand for new cars and, with it, production output,” said SMMT Chief Executive Mike Hawes.

“Whilst it is good to see exports grow in November, this only reinforces how overseas demand remains the driving force for UK car manufacturing.”

The changeover from older to newer models at some British plants has also dented production numbers.

Reporting by Costas Pitas; editing by Mark Heinrich

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