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UK Car Output Rises, Soaring Costs Cast Shadow over Recovery

Sept 29 (Reuters) - British car production rose for a fourth straight month in August, compared with a year earlier, although record input costs cast a shadow over the sectors' recovery, the Society of Motor Manufacturers and Traders (SMMT) said on Thursday.

The industry body warned that almost seven in 10 of its members have expressed concern about future business operations as they fret over rising energy bills.

The SMMT welcomed the UK government's decision to cap prices of energy for businesses over the winter but said costs are expected to more than double again next year, with some manufacturers anticipating even steeper increases.

"While another month of rising UK car production is good news, and testament to sectoral efforts to overcome supply chain shortages, it overshadows what is an extremely tough and uncertain environment for manufacturers," SMMT Chief Executive Mike Hawes said.

The SMMT said 49,901 units were made in Britain last month, 34% higher than the previous year when shutdowns caused by global chip shortages hit volumes, but 45.9% below the 2019 level of 92,158 units as the sector failed to offset losses from the supply woes and struggles to contain surging costs.

The body said energy has emerged as the single biggest concern for the UK's automotive manufacturers, which have collectively racked up more than 300 million pounds ($320.76 million) in bills during the year to August.

Britain said last week it would cap wholesale electricity and gas costs for businesses at less than half the market rate from next month. 

SMMT added that while most companies are absorbing increases where possible, the "competitive and low margin nature" of the industry has meant that about 87% are having to pass on costs, stoking inflation.

($1 = 0.9353 pounds)

Reporting by Muhammed Husain in Bengaluru; Editing by Anil D'Silva

Source: Reuters

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