The fickle nature of monthly snapshot manufacturing figures was brought into focus on Tuesday with news that car output for the UK fell -47% in June. It’s an attention-grabbing number but one should not draw too many conclusions as to the sector’s health given the myriad short-term factors behind it. The longer-term picture is far more indicative. In the first six months of 2018, UK vehicle plants produced 875,854 cars, vans, trucks, taxis and buses, a decline of around -3% but broadly in line with expectations in light of market conditions at home and internationally.
Despite trade tensions with some key international markets, UK production for export remains broadly stable, down just -0.8% in the year. Exports to the US rose 1.5%, with more than 108,000 cars shipped across the Atlantic, while demand grew by 67% in South Korea and by more than three quarters in Japan. With the Japan-EU trade deal now agreed, conditions are set for further growth – provided, of course, the UK is still able to benefit. At the same time, Chinese tariff cuts introduced in July should also help lift demand for British cars in the world’s biggest new car market.
Closer to home, the EU remains our largest partner, taking more than 53% of car exports – another reminder of the urgent need for negotiators on both sides of the Channel to agree a deal. The consequences of ‘no deal’ will not respect borders and, with just eight months before our official exit from the EU, time is running out. Remember, without a deal there will be no transition period so the “cliff edge”will be before us.
Although the outcome of negotiations is ultimately in the hands of politicians, we can act to boost our competitiveness at home. Supporting employment and investment into our supply chain will be critical so I’m delighted to report the £54 million boost to the sector’s competitiveness achieved since 2014 as a result of government-industry collaboration in the Long Term Automotive Supply Chain Competitiveness (LTASC) fund. Managed by SMMT, the £13 million of government funding stimulated an additional £41 million of private investment and secured some 3,200 jobs. With the new National Manufacturing Competitive Levels fund due to replace it this year, we expect to see further acceleration of UK supplier competitiveness.
Finally this week, I leave you with news of several opportunities for members looking to grow business at this September’s Automechanika Frankfurt expo. A small number of booths on the UK pavilion are still available, supported by grants of £1,500 for eligible companies. SMMT is also offering sponsorship packages with branding and social media exposure, as well as the chance to display products in the official UK Aftermarket networking Gallery. For more details, contact SMMT’s international team.
Mike Hawes, chief executive, SMMT