2019 Automotive Sustainability Report

Automotive Production

Since 1999, car production in the UK has gone through significant change. That year, a record 1.8 million cars were produced, following the build-up of output at the Japanese-owned plants. However, by 2006 a number of prominent manufacturers had ceased manufacturing in the UK. Production output experienced a sustained period of growth after the global financial crisis – moving from fewer than a million cars in 2009 to 1.72 million units in 2016, following strong volume growth at Nissan in Sunderland and at premium vehicle manufacturer Jaguar Land Rover. Output has since edged downwards, and in 2018 fell 9.1% on 2017 levels to 1,519,440 units. This followed weaker demand in both the UK and the EU, in particular for diesel cars, as well as supply issues caused by the switch to WLTP type-approved vehicles. Other previously expanding global markets, notably China, also slowed in 2018.

The importance of export markets has increased in recent years. In 2018, 81.5% of cars produced in the UK were destined for
international markets – the third highest level on record. Compare this to exports in 1999, which accounted for 63.9% of output, over 70% in 2004 and 80%, for the first time, in 2011. It is worth noting that the EU accounts for more than half of all UK exports.

The recent decline in output is expected to continue due to global economic and political uncertainty, most notably Brexit and hostile trading conditions. Output is expected to drop by 5-10% through 2019, but this could be greater if the UK leaves the EU without a deal and the sector becomes subject to export tariffs, which would make its products less competitive. Global trade tensions are also high and the industry could be subject to further fiscal penalties in key markets.

For commercial vehicles (CV), production rose 8.5% in 2018 to 84,888 units. CV production had been around the 200,000 unit level per year between 1999 and 2008, but with the scaling back and eventual closing of the Ford Transit plant, as well as LDV closing down in 2009 and Vauxhall Astravan production ceasing in 2013, UK production has declined sharply. In 2018, growth was stable across all the UK’s remaining producers, with the now PSA Group-owned IBC plant in Luton accounting for almost three-quarters of output. Again, exports account for much of the UK’s CV output (60%), with the EU the main destination.

Productivity

UK automotive manufacturing productivity outstripped broader manufacturing and the whole economy by a factor of 1.9 and 2.8 respectively. Automotive output per job growth between 1999 and 2018 was 208%, all manufacturing 108% and whole economy 74%. According to the Office for National Statistics (ONS), productivity in automotive manufacturing tripled over the past two decades, moving from £32,000 to £100,900 worth of output per job. However, in 2018, due to the fall in output, automotive manufacturing productivity dropped by 2%.

Turnover

SMMT estimates (based on ONS data) that UK automotive manufacturing sector turnover almost doubled over the past two decades, from £48 billion to £82 billion. In 2018, it is estimated to have increased by 0.3%. This rise is likely due to an increase in sales volumes of higher value products, such as premium and sport/luxury products taking an increase share of UK production. SMMT estimates that the value added for this turnover was £18.6 billion. Signatories reported £76.9 billion in turnover (signatory activities go beyond manufacturing), representing an increase of 2.8% on the previous year.

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