SMMT News

UK automotive powers forward in 2013

24 December 2013 #SMMT News

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In virtually every respect, 2013 was one of the most successful years for the UK automotive industry in recent times. Not only did output from car plants continue to increase, with a 4.5% rise over the previous year, but new car registrations also head into 2014 on a streak of 21 consecutive months of growth and counting.

While car production in some European countries struggles to overcome the recession, output in the UK – backed by significant new investment throughout 2013 – has almost returned to pre-recession levels, and could be on course to break all-time records in the next few years.

In all, investment announcements into UK automotive in 2013 totalled well in excess of £2.5 billion. Chief among these is a £1.5 billion investment into Jaguar Land Rover’s operations in Solihull, creating 1,700 jobs directly and an estimated 24,000 in the supply chain. Elsewhere, Bentley is benefiting from an £800 million injection – and with it, 1,000 jobs – as it gears up for production of its forthcoming new SUV.

In July, government and industry jointly launched the Automotive Sector Strategy, which commits more than £1 billion in additional funds to UK automotive over the next 10 years. The focus of the Strategy is on enhancing technological innovation, growing the supply chain, developing the base of young automotive engineers and creating an attractive business environment for future investment.

Exports continue to be a massive contributor to the UK economy, with around 80% of the cars we build destined for other shores. In 2013, exports generated well over £30 billion for the economy – a rise of around 7% – and represented more than 6% of all exported goods and services.

Meanwhile, rising consumer confidence was evident in dealerships as customers took advantage of enticing finance deals on new cars, pushing registrations up 10% towards 2.25 million for the full year. On average, UK buyers snapped up around 600 more cars per day in 2013 compared to last year.

2014 is set to be stronger yet in volume terms, although the latest SMMT forecast points to more moderate growth as demand stabilises.

There has been a noticeable shift in buying patterns over the last 10 years, with buyers moving away from more traditional family cars such as the Upper Medium Segment (down almost 10% since 2003) into more fuel-efficient, smaller models in the Mini and Supermini segments (both up more than 2% in the same period). MPV and Dual Purpose segments have also seen increased uptake, with registrations up 2.2% and 4.7% respectively over the decade.

Alternatively Fuelled Vehicles (AFVs) continued to find new buyers, with 2013 volumes up around 16%. Around 1.5% of the new car market was made up of AFVs and, of these, one in 10 was classified as an Ultra-Low Emission Vehicle (ULEV) – one with CO2 emissions under 75g/km. The launch in 2014 of a government-supported campaign to raise awareness of ULEV benefits is expected to boost registrations in the months to come.

Several of the UK’s car plants are currently gearing up for mass-production of exciting new models, which will further enhance the value of UK automotive production. With more investment expected in the months to come, as well as continued upward trends in buyer confidence, UK automotive is set for yet more success in 2014.

For a list of all automotive investment announcements in 2013, click here.

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