UK Car and CV factory output, 2007-2012, courtesy of SMMT

UK Van manufacturing is slumping as domestic and export demand evaporates.

The UK’s vehicle manufacturing industry is larger than many people realise.

In July, 128,886 cars and commercial vehicles were made in the UK, with 941,098 having been made so far this year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

In addition, more than 1.5 million vehicle engines have been made in UK factories so far this year.

Both export and home demand for British-made cars rose in July; so far this year, home demand is up 21.2% and export demand is up 13.9%.

British cars are in demand…

The good news is that global demand for cars made in the UK — like the new Range Rover Evoque — is climbing. Jaguar Land Rover’s Halewood factory has just moved to a 24-hour shift system to meet demand for the Freelander 2 and Evoque models and the company’s sales rose by 34% in the second quarter.

Other British car manufacturing success stories can be found at Toyota’s Derby factory, Nissan’s Sunderland factory and BMW’s Oxford factory, where the MINI is built.

…British vans are not

Unfortunately it’s not such a bright story for vans. Although some popular van models are built in the UK, no one is buying them at present.

The CV industry in the UK is much smaller than the car industry and has a greater focus on the UK market. Of the 65,100 CVs built in the UK so far this year, 40% were destined for the home market, compared to only 18% of cars. This means that van output is far more sensitive to local economic conditions than the car output, especially as many vans are owned by small businesses that tend to postpone major expenditure during lean periods.

The two main commercial vehicle factories in the UK are Vauxhall’s Luton plant, where the Vivaro is made, and Ford’s Southampton plant, where some Transit variants are built. The trouble is, while these both remain extremely popular models, UK commercial vehicle factory output is down by 7.7% so far this year, with export demand down 6% and home demand down by 10.2%.

Although home demand rose by 16% in July — a somewhat suspicious result — even that wasn’t enough to prevent an overall decline of 1.3% last month.

The graph about highlights how car and CV manufacturing has diverged since 2009 — and I don’t see much prospect for improvement until the UK sees some meaningful economic growth.