Auto business costs rise amid Middle East instability

UK automotive businesses have moved quickly to respond to a spate of global challenges in recent years, building resilience into supply chains and logistics post-Covid. The focus now is on managing risks resulting from Middle East instability – with a new SMMT member survey finding nearly two‑thirds of respondents have already encountered disruption since the conflict began in late February. Half of respondents, meanwhile, including vehicle manufacturers and suppliers, have experienced a material effect on their operations today – with more warning that continued volatility will bite within the coming months.

Alongside concerns around the impact the conflict – especially with rapidly rising fuel prices – could have on consumer confidence and spending, industry also noted the major challenges it faces in rising input and operational costs which, concerningly, were already acute before the crisis began. As SMMT’s analysis published last month showed, business costs in 2026 are substantially higher than anticipated at the start of the decade – including industrial energy prices that are 80% higher than expected in 2021, and battery prices 31% higher. Such figures are particularly concerning for the UK’s energy intensive and, increasingly, battery-dependent automotive industry, with four in 10 vehicles built here now electrified and more zero emission models expected.

The latest headwinds intensify the need to focus on our domestic competitiveness. Measures that bring down energy costs are most urgent, but must form part of a supportive policy environment – one that protects Britain’s advanced automotive manufacturing and supply chain, and attracts investment in new vehicle production.

While the news may seem gloomy, the UK automotive industry has navigated major shocks before and by working in partnership with government, it can do so again. Maintaining competitiveness, safeguarding supply chains and exports, and delivering for consumers, the economy and environment – these are objectives we share if we want Britain to be a leading player in decarbonisation for years to come.

With a long Easter bank holiday ahead, however, I hope you can all enjoy something of a break and that the international news turns more positive.