CEO Update

Why only a deal will get investment flowing

02 August 2019 #CEO Update

Car manufacturing in the UK dropped 20% in the first half of the year, according to the latest figures we released this week. These numbers are in part the result of global instability and weakening demand in key markets but are undoubtedly compounded by ongoing worries about what the future holds in terms of our relationship with the European Union.

June marked the 13th consecutive month of negative growth, with 666,521 cars rolling off production lines in the first half of the year, a drop of 168,052 units compared with the same period in 2018. A very worrying trend but UK Automotive’s fundamentals are strong, with high levels of productivity, a skilled and flexible workforce, engineering excellence and globally renowned brands. What is needed, however, is an ambitious Brexit deal that maintains frictionless trade, safeguarding as many of the benefits we currently enjoy as possible.

We’ve been speaking to members in recent weeks and at least £330 million has already been spent by the sector on contingency plans – nearly four times the amount announced as new investment in the first half of the year, which was down 70% to just £90 million. That money would be better spent tackling the global technological and environmental challenges we face, rather than having to be diverted to cliff-edge mitigation.

Too much time and money is having to be moved from valuable projects to cover the costs of stockpiling, storage space, additional insurance and training, compliance with new customs procedures and more. While Jaguar Land Rover’s announcement earlier this month was rare and phenomenally good news, it was something of an outlier with the majority of manufacturers – big and small – having to pause plant spending in the UK amid ongoing uncertainty.

We’re ready to work with the new government to boost the automotive sector. We want to re-create an internationally competitive business environment that will encourage more investment, innovation and growth. We already have an industrial strategy which helps bring all stakeholders together to address the many technological challenges facing the global industry. What we need, however, is a deal – a deal done quickly so that manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.

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