Friday, 23 June 2017

UK car manufacturing hits 17-year high

UK car production rose to a 17-year high in 2016, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT). Some 1,722,698 vehicles rolled off production lines last year from some 15 manufacturers, an 8.5% increase on total production in 2015 – and the highest output since 1999. The SMMT said that exports are at record levels as a result of investments made over recent years in new models and production facilities. The SMMT was at pains to point out that the growth of production last year was not a ‘post-Brexit bounce’. The trade association pointed out that ten new car models began production in the UK last year, nine of them from premium brands which has helped make the UK the second biggest producer of premium cars after Germany and the third biggest car producer in Europe. However, total committed investment announcements in the automotive sector in 2016 were approximately GBP 1.66bn across a number of companies – down from GBP2.5bn in 2015. Production growth was predominantly driven by overseas demand, with global appetite for British-built cars rising by 10.3% to an all-time high of 1,354,216 – a second consecutive annual record. Around eight out of every 10 cars manufactured in the UK is now exported, bound for one of 160 markets worldwide. It was continuing economic recovery across Europe  that accounted for the bulk of export growth. Exports to the rest of the EU grew 7.5% to 758,680 and accounted for more than half of all UK car exports. Furthermore, SMMT said that Europe supplies the majority of components within UK-built vehicles, underlining the critical importance of tariff and barrier-free trade to future UK automotive production. Growth was strong across a number of markets, notably the US – the UK’s biggest export destination after the EU – where demand rose by almost half (47.2%) meaning it now accounts for around 14.5% of all UK car exports. Notable uplifts were also seen in Turkey, Japan and Canada whilst China, third on the list of export markets, grew by a more modest 3.1% with 88,610 vehicles exported last year.

Domestic demand for UK built cars also grew last year, up 2.4% in the year, and the UK remains the second largest car market in Europe, again after Germany. One in seven new cars registered by UK buyers is now made in Britain, up from one in eight three years ago. Mike Hawes, SMMT Chief Executive, said: “The tremendous growth in UK production is testament to the global competitiveness of the UK automotive sector. High class engineering, advanced technology and a workforce committed to quality have helped turn around the industry, making the UK among the most productive places in Europe to make cars. “Significant investment in new plants and products over the past few years has driven this growth, not a post-Brexit bounce. We want trade deals but they must be the right deals, not rushed deals. Failure to do so could damage UK automotive manufacturing beyond repair.” However, Hawes expressed concern over the outlook for UK car manufacturing and uncertainties to UK-Europe trading arrangements presented by Brexit. At a media presentation in London, he noted that the UK auto industry has said that it wants the UK to remain a member of the EU’s single market but that does not look possible, politically, and that a free trade agreement with the EU now looks more likely. “Brexit is a significant  challenge for this industry,” he said.”But 2016 was hugely successful for the UK automotive sector and we want that success to continue. We are highly competitive and able to attract investment – both from UK companies and abroad – it’s a very productive and skilled workforce and the UK industry is highly innovative.” Hawes also noted that there is a degree of mutual interest between the UK and EU. “There are political issues, of course,” he said. “But I would hope we can agree something that ensures the success of the UK auto industry continues, which I also believe will support the success of the European and global automotive industries as well.”

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