CEO Update Uncategorised

The importance of Europe to the UK automotive industry

21 March 2018 #CEO Update #Uncategorised

In a key speech on Brexit today, the Prime Minister was right to recognise the importance of integrated supply chains and borders free from quotas and tariffs for key sectors such as automotive. Barrier free access to the EU market and complete regulatory convergence have been the foundation of our success.

There is no escaping the fact that being out of the customs union and single market will inevitably add barriers to trade, increase red tape and cost. Settling for “good” access to each other’s markets is not enough as it will only damage the UK’s competitiveness and reduce our ability to attract investment and the high quality jobs that go with it.

Brexit is finally being recognised as a highly complex and difficult negotiation which is why we urgently need a transitional arrangement which allows business to continue as normal until the UK’s new trade arrangement with the EU has been agreed and implemented.

The importance of Europe to the UK automotive industry was again underscored this week with the release of the first car manufacturing figures of the year. Performance was stable, with almost 150,000 cars leaving British factories in January but 80% were destined for export (a record for the month), the majority for wider European markets. Engine production also enjoyed a record start to the year, rising 13.6%, and as with cars, most engines made in Britain this year headed abroad.

Elsewhere this week, SMMT launched its 17th annual New Car CO2 report at a Parliamentary reception. Around 150 MPs, Lords, government officials, automotive representatives and other stakeholders came together to discuss how our sector can work with policy makers and others to deliver a low carbon future.

Fundamental to this shift will be improving both air quality and lowering CO2 emissions – responsibilities the industry takes seriously. However, SMMT’s latest report showed that last year, new car fleet average CO2 emissions rose for the first time in nearly two decades – by 0.8% – despite the significant progress manufacturers have made refining the emissions performance of new vehicles.

So why the rise? A significant factor was the recent shift away from diesel. 2017 ended with demand for new diesel cars down more than 17% – a trend driven by public confusion about government policies on taxation and air quality, and a failure to differentiate between old and new technology. January this year saw a further, 25.6% drop in diesel demand with motorists keeping their older, more polluting cars rather than switching to alternative fuel types or petrol.

Consumers and businesses should be encouraged to buy the right car for their lifestyle and driving needs, across all fuel types – petrol, electric, hybrid or diesel – and we can’t forget that diesel remains the right choice for many, especially for high mileage drivers. We do need the public to invest in the next generation of technologies but this needs long-term incentives and consistent supportive polices – including taxation – coupled with investment in infrastructure, especially charging points. To do otherwise will be to handicap the industry and threaten its long-term viability.

Mike Hawes, SMMT Chief Executive

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