CEO Update

Autumn brings fresh challenges to industry competitiveness

24 September 2021 #CEO Update

Businesses in the UK currently face the highest electricity costs in the EU. So the recent increase in the price of energy, and indeed the market volatility, represents yet another barrier to investment for the automotive sector.

The global shortage of semiconductors, high business rates and additional trading costs are already putting pressure on companies across the industry, not least the supply chain, with production volumes being cut, deliveries erratic and the new car market damaged.

Adding yet more cost to UK automotive manufacturing, therefore, could not come at a worse time, and, with the price of electricity likely to become increasingly important as the industry transitions to electric vehicles and battery manufacturing, the need for stable, sustainable and competitive energy is paramount.

While some energy intensive industries, such as steel or chemicals, are afforded support including rebates for the costs of past renewable subsidies, the automotive industry is ineligible.

The price of electricity is important not only for vehicle makers but also for consumers and businesses that rely on a competitive, reliable and stable power network to charge the latest electric models that are in increasing demand.

If the UK’s automotive industry, including its market and manufacturing sector, is to remain globally competitive, we need a more effective framework. Given the impact of Covid on the supply of semiconductors and effect that is having on production volumes and supply chain commercial viability, Government can help immediately by continuing the supportive Covid measures already in place, especially the furlough scheme which has been essential to so many businesses.

In the medium term, action to reduce business energy costs to below the EU average would provide a significant boost. But aspects of business costs – from business rates to skills levies – need to be looked at if we are to have a competitive and successful automotive industry, one that is at the forefront of the transition to a decarbonised future.

Free and fair global trade is also central to our competitiveness, an issue set to be high on the agenda at SMMT’s inaugural Global Trade Conference on Tuesday 12 October. Against a rapidly changing landscape, the online event will bring together high-profile speakers to address global and regional trade priorities and explore the growing intersection between trade, environmental and competitiveness objectives.

Adrian Hallmark, Chairman and CEO, Bentley Motors, The Rt Hon Emily Thornberry MP, Shadow Secretary of State for International Trade and Graham Stuart MP will all be providing keynote speeches.

For more information, and to register for the conference, please visit the website here.

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