Business Day update from motor show – 26 May 11:00

26 May 2004 #SMMT News

  • Exports to drive record car production by decade end
  • Mazda turns up sales and dealer volumes
  • Interest rates a threat to industry, says Evans

Exports to drive record car production by decade end, says industry expert

Britain’s car factories will become increasingly dependent on European car buyers’ tastes with 70 per cent of production currently being exported, according to leading auto industry pundit, Professor Garel Rhys.

Speaking at The Sunday Times Motor Show Live, Professor Rhys, Cardiff business school’s automotive industry director, said: ‘The dependence on our domestic market by UK car makers is a tenuous thing of the past with more than 80 per cent of sales coming from imports.’

He claimed: ‘It is now the global motor industry in Britain, but it remains dynamic with export levels exceeding Japan’s.’

Professor Rhys said the UK new car market was going from strength to strength and heading for a record 2.65 million sales this year.

‘It is as competitive as ever with weak prices and the consumer getting a good deal. The UK acts as a dynamo for foreign producers with only us and Spain generating vibrant sales,’ he said.

The veteran analyst predicted that UK car output would reach 1.7 million units this year and could outstrip the 1972 record of 1.9m by the end of the decade.

‘Forecasts of a meltdown after car production ended at Luton and Dagenham have proved wrong. They have been more than offset by extra volume at Land Rover, Jaguar and MINI while the Japanese brands remain strong,’ explained Professor Rhys.

But he issued a warning that UK plants needed to continue producing attractive products and gaps had appeared in the portfolio with the lack of compact MPVs, small ‘box van’ light commercial vehicles and heavy trucks.

Asked if he thought any of the multi-national companies with production outposts in Britain might abandon output, he said: ‘These questions never go away and are very complex political, currency, logistical issues. But I don’t see anyone at risk because UK products are good. Manufacturers do not owe us any favours, we must win the argument. It is about buying the best product from the best source.’

Professor Rhys said ‘the only slight worry’ was the rise in oil prices and he criticised the anti-car lobby for believing ‘driving is purely indulgent and people are aching to get out of their cars into other forms of transport.’

He asked: ‘Which other form of transport allows you to file your own flight plan? Driving is not about indulgence there is always a purpose, a consequence.’

Mazda turns up sales and dealer volumes

Mazda, whose rapid UK sales growth should push sales of the brand up to nearly three per cent of the market in 2007, is recruiting extra dealers to cope with demand.

Phil Waring, Mazda’s UK managing director, revealed that he had been forced to revise sales volumes and dealer numbers upwards.

He said: “We should break through the two per cent barrier next year by selling 52,000 cars rising to close to 58,000 in 2006 and onwards and upwards in 2007 to 70,000 units.”

His original target for an expanded sales network was to grow from 145 to 156 dealers but that has been adjusted to 185 because, Waring explained, “market territories which were not on the radar screen will become viable propositions, places like Grantham in Lincolnshire.”

Waring will use The Sunday Times Motor Show Live as an interview point for “one or two prospects” and he said: “We have developed a strategy for smaller and regional groups plus collaborative business models which make good money.”

Potential retailers are being attracted by the new range and a 2.5 per cent profit on turnover, generated by the RX-8, the 3 and 6.

Waring admitted that much of the growth would come from a secret new Mazda small car to slot in below the 2, which is built at Ford’s Valencia factory, alongside the Fiesta.

Mazda will provide the basis for the next small B-sector car, which will be shared by the Fiesta.

Interst rates a threat to industry, says Evans

Escalating interest rates present a major threat to record UK new car sales according to Tod Evans, president of the Society of Motor Manufacturers and Traders.

Evans warned: “There is a huge risk to market growth from increased interest rates.

“Thankfully at present the Monetary Policy Committee is carefully edging up rates at one quarter of a per cent each time to manipulate a soft landing for a pretty hot economy. But if there is a ratcheting up and the housing market peaks and falls back it will have a dramatic effect particularly on big ticket item spending like cars.”

Evans did not rate higher fuel prices as an imminent threat to showroom business and said: “If people want to drive from A to B they will use the most effective means available which is the car, new or used.”

Referring to a market, which he claimed: “logically should not be growing” Evans said it was based on a stable confident economy, cheap finance and resulted in being able to buy new cars on repayment terms which are similar to deals done three years ago. These factors overcame the increasing reliability of cars and three year warranties which might be expected to suppress demand.

Filter News

Update Newsletter