UK commercial vehicle output fell by 20.2% in September, as export demand fell by 26%, accelerating this year’s decline in output.

UK van manufacturing fell by 20.2% in September and is down by 7.5% so far this year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

A 26% drop in export demand coupled with a 12.5% drop in domestic demand lay behind the drop. Falling export demand has been a continuous trend since the start of 2011, as this graph shows:

Commercial vehicle manufacturing 2007-2012

Car Output Falls

For most of the last three years, car manufacturing output has proved far more resilient than commercial vehicle output, rising steadily from its nadir in 2009 to be above 2007 levels earlier this year.

However, last month saw export demand for British-made cars fall by 8.9%. Since 80% of the UK’s car manufacturing is exported, this made a big dent in the monthly output figures that wasn’t cancelled out by a 9% rise in domestic demand for British-made cars.

The good news is that UK car manufacturing output is still up by 10.2% so far this year despite September’s fall. A total of 1,083,276 cars were  exported from the UK in the first nine months of 2012.

European crisis

September’s fall in demand and ongoing weakness in commercial vehicle demand is mostly due to the eurozone crisis, according to Paul Everitt, SMMT Chief Executive:

“Declining demand for cars and vans across the major European markets impacted UK vehicle and engine production in September.

Everitt stressed that long-term structural damage to the motor industry could result if the crisis is not brought under control soon:

European governments must focus on securing financial stability and economic growth or they risk long-term damage to key industries.”

Despite this, leopards don’t change their spots and so far, Europe’s politicians have done everything possible to drag out the crisis. Every step forwards is agreed reluctantly and at the last minute, and measures are often watered-down or compromised. Greece, Portugal, Spain and probably Italy all appear to be locked into a spiral of deepening recession with no ability to reignite growth.

We can only hope that the UK’s motor manufacturing industry can hold out through the crisis — as a major UK employer, any substantial downturn in this area would be bad news indeed.