As August and the ‘summer shutdowns’ period draws to a close, next week will be very much ‘back to business’ for the automotive industry, and indeed, the wider economy. That business is, however, very challenging and, as we saw this week with the publication of July’s car and commercial vehicle production figures, there are significant structural changes underway which underpin some negative numbers but – and it is an important ‘but’ – there are grounds for optimism.
While car production output continues to shrink this year, this had been expected. Against a backdrop of some supply chain constraints, model changeovers and the shift to new powertrain technologies, plant output is holding up reasonably well. What is most encouraging, however, is the fact that the total value of production – based on factory gate prices – remained essentially the same despite the decline in volumes. This is testament to the high value of UK automotive production such that, even when the sector is in a temporary slowdown, it can continue to bolster the economy. Of course, our ability to maintain such economic strength depends on having the right conditions in place to boost competitiveness, because competition is fierce and we cannot rest on our laurels.
Commercial vehicle output, meanwhile, has soared. With sector-specific supply pressures easing, the sector continues to grow, building on the robust performance it delivered last year. The foundations remain strong and the billions invested in production will bear bigger fruit in the years to come – although much as the Prime Minister warned in the Rose Garden this week, the near term could be tough, as we wait for new models to come online.
Talking of near-term, next week sees Parliament back from recess, and the expected biannual boost to the new car market, with the very latest numberplate arriving in September. As one of the biggest months of the year, September’s new car and van registrations will be a bellwether for buyer sentiment, especially for EVs which are increasing in volume, even if market share growth is more measured. October’s Budget will be a key moment for the Chancellor to support consumers in this market transition and industrial transformation.
September is also prime time for business events – with next week’s Cenex Expo starting off what will be a busy month both home and abroad. It is the month of Party conferences, and we can expect resurgent Labour and Lib Dem conferences, flushed with the success of the General Election, and a Conservative Conference that will be a hustings for the final four candidates to be the next leader.
September is also a big month for SMMT’s International activities and, with the PM looking to strengthen our relationship with Germany and Europe, we will be doing likewise, participating in Automechanika Frankfurt from 10 September, and IAA Transportation in Hannover shortly afterwards. These are major international events and it is important that SMMT and the UK industry attend and make the best case for business development and investment.
With the most ambitious transition timeline of any major market, and one of the world’s most diverse and varied automotive manufacturing sectors, keeping the industry at the forefront of the world’s attention will be instrumental towards boosting Britain’s economy.
