UK automotive turnover is estimated to have improved after the recession, recovering from £41 billion in 2009 to £49 billion in 2010 (pre-recession levels over £50 billion). The sector added some £10 billion to the UK economy in 2010, on par with pre-recession figures, as exports picked up sharply.
The value of UK exports rose to £29 billion in 2010, just ahead of the 2008 peak. The automotive sector represented almost 11% of all UK trade in goods in 2010.
Approximately four out of five vehicles produced in the UK are exported and increased sales of premium products to markets such as China and the US helped lift the UK automotive sector’s performance.
The number of automotive jobs stabilised in 2010 at just below 740,000. Jobs in manufacturing dipped below 150,000, but other direct jobs related to supply and in-use activities rose.
The UK has attracted significant automotive investment recently and the devaluation of sterling has supported the sector.
Export focus to growth
In 2010, 77.9% of all vehicles produced in the UK were destined for export. Of the 1.27m cars produced in the UK almost one million units (78.7%) were exported.
The total number of vehicles produced for export rose by 30.9% in 2010, compared with growth for the home market of 18.0%.
Exports continued to rise in 2011.
New investment to support growth
The automotive industry is truly global and attracting inward investment to the UK remains a high priority for industry and government.
Development of a suitably skilled and flexible workforce is a top priority achieved through investment in training and apprenticeship schemes.
The past two years have seen a number of high-profile announcements regarding investment in the UK automotive sector. These have amounted to the creation of around 8,400 new jobs, the safeguarding of over 12,000 jobs and investments in production expansion and new models worth over £3.9 billion.
Each year, the Budget includes specific taxation measures for the motorist. In 2001, government changed the vehicle taxation system aligning it to tailpipe CO2 emissions. This was further modified in 2009 as the limits between bands were tightened.
How significant is the automotive industry to the UK economy?
The automotive industry is a vital part of the UK economy with £52 billion turnover and £10 billion value added. With over 800,000 jobs dependent on the industry, it accounts for 10% of total UK exports and invests £1 billion each year in R&D. Not only does it contribute to the economic well being of the country, but it also employs a huge amount of staff, from component and vehicle production to aftersales and servicing.
What does the motor industry want from the Chancellor at Budget time?
The motor industry, like any other, thrives in a stable economic climate. Constant changes and unexpected alterations to the rules and regulations are likely to have a negative impact on the sector.
Why does the industry refer to registrations rather than sales figures?
The simplest way to record when a vehicle has been sold to a customer is the point in time when it is registered at the Driver and Vehicle Licensing Agency (DVLA) in Swansea, UK. In this way it is possible to identify real sales of vehicles, rather than ‘orders’.
Why are there peaks and troughs in the registration figures throughout the year?
The figures reflect the twice-yearly change in registration number on the vehicle in March and September, and also the slight peak at the start of the year.
How many new cars are registered each year?
The economic downturn meant industry faced unprecedented reductions in the number of new cars being bought. The introduction of the scrappage scheme has had a positive impact and means that in 2009, registrations should reach 1.9 million. The record registration year was 2003, when 2,579,050 vehicles were registered.
Year and registrations
1995 = 1,945,366
1996 = 2,025,450
1997 = 2,170,725
1998 = 2,247,402
1999 = 2,197,615
2000 = 2,221,647
2001 = 2,458,769
2002 = 2,563,631
2003 = 2,579,050
2004 = 2,567,269
2005 = 2,439,717
2006 = 2,344,864
2007 = 2,404,007
2008 = 2,131,795
The majority of cars bought under the scrappage scheme were imported so the scheme really only benefitted foreign companies.
It’s not just about the cars built in the UK – over three million engines are built in the UK each year, many of which are exported for use in vehicles assembled abroad. It is not simply a case of looking at the models produced in the UK but considering the full impact of a car’s major components. The scheme has boosted the new car market, supporting the 600,000 plus people employed in the automotive retail and repair sector as well as those in manufacturing. Automotive is a truly global industry – the UK has benefited from international scrappage schemes creating demand for UK-built vehicles too.
Why has the £2.3bn Automotive Assistance Programme failed to help the industry?
Both industry and government are frustrated that the AAP has failed to deliver its intended support to the UK motor industry. It is essential that a more flexible approach is adopted so that viable businesses can access the working capital they need in the short-term and support investment in future technologies for the long-term. Industry remains concerned that the reluctance of banks to provide direct support to the automotive sector is limiting the effectiveness of AAP and its benefit to companies in the supply chain.
What more can be done to support the motor industry?
The availability of affordable finance and credit remains the number one priority for companies at all levels of the supply chain. Vehicle manufacturer finance arms need access to the wholesale credit guarantees currently only available to the larger banks – Extending the eligibility criteria of the credit guarantee scheme to all motor finance providers would improve availability and reduce the cost of funding (particularly long-term), with an immediate beneficial effect on consumers.
Do you think we have seen the worst of this recession? What is the outlook for the economy?
We are in the very early days of a long recovery and government action is needed to sustain this by continuing to build consumer confidence and resolve the credit issues which are still hampering the recovery of companies throughout the supply chain. The automotive industry remains in a fragile state and action is needed to sustain recovery and build consumer confidence. A lack of available credit is still hampering the recovery of companies throughout the supply chain, making this a key priority which industry is urging government to address. The commercial vehicle market is still suffering and specific action, such as increased Annual Investment Allowances, is needed to support businesses.
|17.5.12.||Vauxhall commits to UK manufacturing at Ellesmere Port||
Vauxhall today confirmed that it will invest £125 million to continue manufacturing at its Ellesmere Port plant in Cheshire, creating 700 new jobs.
|4.1.12.||Nissan Sunderland’s 25th anniversary marked by a record-breaking year||
Staff at Nissan Sunderland capped the plant’s 25th anniversary year with a string of new UK car industry records. In 2011, the plant made a total of 480,485 vehicles, besting the 423,262 cars produced in 2010, which was the first time any UK car plant made more than 400,000 cars in one year.
|8.12.11.||Access to finance is key to automotive supply chain growth||
A new report, published today, has highlighted the need to get capital into the UK’s automotive supply chain to stimulate growth and take advantage of the opportunities created by recent OEM investment announcements.
|29.11.11.||Autumn Statement delivers boost to UK competitiveness||
The Chancellor has responded to industry calls to reform the R&D tax credit system, announcing the change to an ‘above the line’ credit in today’s Autumn Statement. The reform will signal the UK’s international competitiveness, generate more investment in UK R&D, safeguard jobs and affirm the country’s status as a prime location to base high-skill operations.
|25.11.11.||Automotive industry calls for investment and growth action in Autumn Statement to boost UK competitiveness||
In a letter to the Chancellor, SMMT has called on government to use next week’s Statement to deliver tangible changes to unlock private sector investment and support export-led growth.
|7.11.11.||Manufacturing sector calls for tax reform to boost R&D investment and jobs in the UK||
Reforms to R&D tax credits could drive an increase in R&D investment in the UK and boost job creation, according to an independent report published today.
|12.10.11.||UK automotive sector is ripe for investment||
This week, SMMT has stepped-up its engagement with UK and international investors, setting out prime growth opportunities offered by the shift to a low carbon economy.
|18.11.10.||UK automotive production: October 2010||
UK car output rose by 6.0% in October and 31.1% over the year-to-date.
|21.10.10.||UK automotive production: September 2010||
Car output rose by 35.0% over the year-to-date, with a 5.8% rise in September.
|20.10.10.||SMMT welcomes government’s commitment to economic growth||
In reaction to today’s comprehensive spending review, the Society of Motor Manufacturers and Traders (SMMT) is encouraged that, whilst challenging decisions had to be taken, government committed to prioritising areas that will generate growth including ultra-low carbon transport and skills.
|23.3.11.||Budget and growth review – SMMT Briefing||
The Chancellor opened the Government’s Budget and Growth Review in the context of creating a strong and stable economy, growth and fairness. This briefing sets out the Key budget measures UK Economic Outlook and OBR revised forecasts Growth Review Annex: Links to further information DOWNLOAD REPORT
|19.3.11.||Government response to the BIS committee report on LEPs||
Government welcomes the Committee’s broad support for the creation of LEPs and believes that local communities and businesses are in the best position to understand and respond to the opportunities and needs of their own economies, and that creating LEPs will allow them to do this.
|14.3.11.||Environmental Audit Committee report on the Green Investment Bank||
The Environmental Audit Committee has published its report on the Green Investment Bank (GIB). It has warned that the UK could potentially lose out on hundreds of billions of pounds of investment in green energy projects if government does not commit to its plans for a GIB.
|27.5.09.||London Electric Vehicle Delivery Plan||
Boris Johnson, Mayor of London, has launched an “Electric Vehicle Delivery Plan” for London. The document forms the basis of the Mayor’s aspirations to make London a leading centre for electric vehicles (EVs).
|27.5.09.||CARS21 Mid-Term Review Conference||
The CARS21 Mid-Term review conference took place in Brussels on 29th October.
|20.5.09.||NAIGT report – “An Independent Report on the Future of the Automotive Industry in the UK”||
NAIGT was established in April 2008 with the task of developing a 20 year vision for the future of the UK automotive industry and to make recommendations on how to achieve this vision.
|20.4.09.||Ultra-Low Carbon Vehicles in the UK||
In January 2009, Geoff Hoon, transport secretary, announced that government would be investing £250 million in low-carbon vehicles as part of government plans on low-carbon transport.
|25.3.09.||Environmental Audit Committee – Green fiscal policy in a recession||
The House of Common’s Environmental Audit Committee has published a report in response to the 2008 Pre-Budget Report and the green fiscal policy measures put forward by the chancellor.
|19.3.09.||UK Low Carbon Industrial Strategy||
In recognition of the findings of the Stern report and committing to targets in reducing carbon emissions, the UK government has enacted a strategy to initiate a transition to a low-carbon economy.