UK automotive sector is ripe for investment

12 October 2011 #SMMT News
  • UK automotive has attracted over £4bn of global automotive investment so far this year, securing long-term growth for the sector.
  • Many investment announcements were specifically in low carbon technologies while several others were linked closely to the low and ultra-low carbon fields.
  • UK automotive companies invest more than £1.5bn per year in R&D, creating the technology and product of tomorrow.
  • This week, the Society of Motor Manufacturers and Traders (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.

    Click the following link to jump straight to the on-demand web TV show below.

    Highlighting the cutting-edge technology and product R&D currently undertaken in the UK, and its potential to transform the global sector, SMMT, PwC and the Low Carbon Vehicle Partnership yesterday presented to the UK’s investment community and industry leaders. Discussion focused on the how investors can get involved in the future of UK automotive and the significant role export-led manufacturing will play in driving economic growth towards a rebalanced economy.

    The event followed a wave of announcements from global OEMs committing long-term investment to UK plants and product development facilities. It aimed to raise awareness of the growing opportunities presented by niche vehicle manufacturers and low carbon component suppliers. Over the past 10 months, a host of companies have committed in excess of £4bn to UK automotive, demonstrating their confidence in the sector.

    “The UK is already a global focal point for low and ultra-low carbon technologies and the recent wave of investment announcements from major multinational brands is evidence of its strength and growth potential,” said SMMT Chief Executive, Paul Everitt. “The transition to a low carbon economy is a major opportunity for UK automotive companies whether it’s in developing or building components, vehicles or infrastructure. Investors committing to the sector now will reap the rewards that automotive companies are already experiencing from growing export demand across new and emerging markets.”

    SMMT’s new focus on investor engagement draws attention to the growth potential of a number of priority technology areas, identified by the Automotive Council, that could deliver significant return on investment. The technologies are energy storage and management, electric motors and power electronics, internal combustion engines, lightweight vehicle and powertrain structures, and intelligent mobility.

    It is these technologies, fuelled by R&D and investment that are expected to drive growth to new and developing export markets such as China, India and Russia. Automotive companies based in the UK have already committed billions of pounds to R&D, production facilities, new models and infrastructure. In addition, there is an industry-wide desire to source more materials locally, particularly components in high technology, low carbon and electric vehicle areas.

    Jamie Houghton, Transport Partner at PwC, added, “The low carbon vehicle sector is making significant progress in charging infrastructure, battery and vehicle development. Along with the clear resounding message from government that they are supportive of this area, the event also highlighted potential areas for  investment in UK organisations for what is an expanding global market. Government has made its emissions targets very clear and is stimulating demand through sustainability funding, the onus is on us all to deliver.”

    Earlier this year SMMT published a report titled Invest Now that set out the business case for investing in UK automotive and summarised the strength of UK automotive. In the report, the UK was shown to be ranked in the number one position in Business Monitor’s rankings of ‘Business Environment’, while it was considered that the shift to low carbon motoring placed the UK at the centre of global developments in R&D and engineering of these new technologies.

    Recent industry and government collaboration through the Automotive Council, has shaped policy to rebalance the economy away from services and towards manufacturing. Specific policies that promote stability, growth, simplified regulation, investment, skills and incentivising innovation are designed to boost existing manufacturing while attracting inward investment. These measures, coupled with schemes to enhance availability of finance and credit are crucial to reinforce the commitment of existing UK-based operations, while broadening the appeal of the UK and the automotive industry to new suppliers and investors.

    UK automotive represents around 3% of total GDP, accounts for two thirds of total manufacturing turnover and is the country’s largest sector in terms of exports, generating around £24 billion in revenue. Typically achieving a turnover of around £50bn, employing over 700,000 people and producing an annual net value-added to the economy in excess of £10bn, the significance of the sector and its appeal to international investors is plain to see.

    You can watch our web TV show on-demand below for a comprehensive look at the industry and an outline of investment opportunities in today’s climate.

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