Carmakers hammered by Beijing’s zero-covid policy

CAR production collapsed by 11pc in April as China’s strict zero-covid policy exacerbated a shortage of microchips crucial to making vehicles.

Factories in Britain made 60,554 cars last month, a drop of 7,752 compared with the same period a year earlier. Aside from 2020 when factories were forced to close in the early days of the pandemic, it is the worst April performance since 2009, figures from the Society of Motor Manufacturers and Traders (SMMT) showed.

In China, nearly 60m people are living under some form of Covid restriction as the country battles to contain the virus. In Beijing and Shanghai, workplaces and schools have closed, with only businesses that can prove workers are isolated from the wider population allowed to continue operating.

This has led to factory closures and port disruption, slowing down the supply of chips and car parts.

Mike Hawes, chief executive of the SMMT, said: “The UK car industry is exposed to a host of issues that are undermining output and competitiveness. Global chip shortages and supply chain disruption are exacerbated by spiralling energy costs, additional trading costs and slowing global markets.”

As well as parts shortages, the industry is feeling the effects of the loss of Honda’s plant in Swindon, which closed last year and had a capacity of up to 150,000 cars per year.

The closure left Nissan’s plant in Sunderland and Jaguar Land Rover’s plants in Birmingham, Solihull and Liverpool, as the largest makers of cars in Britain, followed by BMW’S Mini plant in Oxfordshire and Toyota’s factory in Derbyshire. The Honda plant exported many of its vehicles to the US and its closure means a shift towards more British-made cars being sold to Europe.

Chris Knight, a partner at KPMG, said: “Consumer demand for new cars remains high despite the cost of living crisis, but supply shortages mean that manufacturers still don’t have the ability to produce cars at pre-pandemic volumes, and won’t for some time.”

The industry is also enduring high electricity prices in the wake of Russia’s war on Ukraine. High prices for the industry could harm its competitiveness, the SMMT said.

Despite low production, plants are electrifying their production lines and 10pc of Uk-made cars are now battery powered, the figures showed, and more than a quarter are electric or hybrid.

Mr Hawes added: “We need more measures that support manufacturing and encourage investment into the UK at this most challenging of times.”