UK car industry’s 1m vehicles a year target slips by two years to 2025

The UK car industry has said it will not be able to produce a million vehicles a year until 2025, two years later than expected, after the global sector was hit by a string of crises.

Russia’s invasion of Ukraine, Covid-19 lockdowns in China and continued shortages of computer chips have all combined to stall the recovery in car-making, leaving manufacturers unable to supply enough cars to willing buyers.

The problems will cost the UK industry 113,000 sales this year, according to a forecast commissioned by the Society of Motor Manufacturers and Traders (SMMT), a lobby group.

British factories built 403,000 cars in the first half of the year, down 19% on 2021 despite improvements in May and June. Production in June was up 5.6% year on year, even after Honda closed its Swindon plant and Vauxhall switched another to making vans.

Mike Hawes, the SMMT’s chief executive, said the industry was suffering in part from “long Covid”, as issues caused by the pandemic dragged on. Semiconductor computer chip shortages are “going to be with us certainly this year and probably through next year as well”, he said. Shanghai, an important source of parts as well as a major port, endured a strict two-month lockdown in the spring.

Russia’s aggression has added to the problems. Ukraine was an important supplier of wire harnesses, cheap but crucial components that hold cables together.

<gu-island name="EmbedBlockComponent" deferuntil="visible" props="{"html":"","caption":"Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk","isTracking":false,"isMainMedia":false,"source":"The Guardian","sourceDomain":""}” readability=”1″>

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

“We’re still not quite in recovery mode from Covid,” said Hawes, despite a “degree of optimism. The challenge is supply.”

The car industry has managed for the most part to avoid more recent problems at the UK’s shortest Channel crossings, which have been blamed on extra post-Brexit checks and large volumes of tourists. The industry shifted to other ports such as Immingham in Lincolnshire and Southampton, which are less vulnerable to the tourist traffic that has caused chaos in recent days at Dover and Folkestone in Kent.

However, Hawes said the industry was still affected by Brexit problems. The SMMT has written to the government to ask for an extension of a deadline for a new post-Brexit type approvals – safety checks required for every model sold. Before the UK left the EU, type approvals in other countries were valid for sale in Britain, but the government has given an 18-month deadline to bring in a new regime.

It has so far failed to produce the regulation governing this regime, leading to concerns in the industry over possible delays.

The Guardian