SMMT’s second annual trade report, Risks and Opportunities: UK Automotive Trade In A Post-Covid World, is published at a time of extreme uncertainty for the global automotive industry as it faces the exceptional challenge of the coronavirus pandemic. The impact on society has been unparalleled and for many, tragic, while the shock to the economy and industry has been devastating.
Yet, beyond the pandemic, other more familiar challenges remain; ongoing trade tensions, environmental pressures, technology shifts and, for the UK and our closest trading partners, Brexit and the looming end of the transition period. The outcome of these negotiations will be fundamental to our sector’s ability to recover from the chaos wrought by Covid-19 – and to its long-term viability.
UK Automotive is built on firm foundations with a rich heritage of innovation and cutting-edge engineering. It is agile, flexible and fundamentally competitive, with world-leading levels of efficiency. In 2019 the sector generated more than £100 billion in total trade for the third consecutive year, highlighting its role as a global trading powerhouse, and held the lead as Britain’s biggest exporter of goods by a considerable margin. Exporting vehicles, engines and components to more than 150 countries worldwide across all continents, the sector is key to the UK’s international trade agenda and supports thousands of highly skilled, high value jobs across all regions.
The vast majority of UK-produced automotive goods exported overseas are destined for the EU and some seven out of 10 vehicles bought by UK consumers come from factories in the bloc. Securing a comprehensive free trade agreement with our largest trading partner is paramount. The sudden imposition of tariffs, just as the sector strives to restart and recover from the current crisis, would be catastrophic. Furthermore, if we are to retain the preferential trade we currently enjoy with other key markets around the world after the transition period ends, and capitalise on future global growth, we need deals with these other countries agreed in parallel.
How quickly automotive recovers from the shock of the pandemic will be decisive for Britain’s overall recovery and future prosperity, global influence and reputation. As well as potentially creating further skilled jobs, the sector can lead the world in technological development and drive the transition to a zero-carbon economy.
As the coronavirus crisis begins to dial back and government helps to nurture the nation back into economic growth, it is UK Automotive that can be an engine room of success. The next few months will be critical for determining its future. This report sets out a comprehensive analysis of the sector, the value it creates for the economy and its importance to future trade. Providing a detailed picture of future growth markets and the UK’s current ability to serve them, it sets out key recommendations to help policymakers and industry grow existing trade relationships and unlock new markets – keeping this vital sector at the heart of the UK’s future trade strategy.