2021 was always going to be a difficult year for the UK automotive industry. The pandemic, new trading relationships with the EU and rest of the world, and the technological transformation of the entire sector were to challenge everyone, including SMMT.
Despite the roll out of vaccines accelerating from the start of the year, the UK entered 2021 in its third national lockdown. Car showrooms remained closed until 12 April, forcing manufacturers and their networks to move online, investing in digital channels to enable click and collect services, providing a lifeline for the industry.
The effects of the pandemic, however, continue to blight the sector. Although production has largely remained operational, the global shortage of semiconductors has created an unpredictable and disruptive environment. Vehicle production and supply chains have been negatively impacted and, with shortages expected well into 2022, all manufacturers are working hard to mitigate the effects and fulfil orders. Nevertheless, there remains a fragility and volatility across the industry.
2021 also commenced with a new UK-EU Trade and Cooperation Agreement (TCA), signed barely a week before the turn of the year. Whilst by no means a substitute for the benefits we formerly enjoyed with the EU, the TCA addressed our immediate concerns by providing an opportunity for tariff and quota-free trade, but it did not provide the “friction free” trading for which we had long hoped. That said, it was an outcome under which we can begin to rebuild, providing the relationships between the UK, the EU and other countries, remain constructive. With international activities restarting and trade talks intensifying, we can continue to play a vital role in the recovery of the UK economy and its global aspirations.
Significantly, 2021 has seen an acceleration in the decarbonisation of the transport sector. Such has been the surge of EVs this year, SMMT now estimates that more EVs will be registered during 2021 than the whole of the last decade combined. For this to continue, however, we need to ensure affordability and accessibility through long term incentives and the roll out of infrastructure for all vehicles. Government plans to end the sale of non-emission free cars, buses and trucks from as early as 2035, represent the most fundamental of challenges to the industry.
There are, of course, many other issues before us; Digitialisation and production line transformation, skills shortages, increasing demands for connectivity and autonomy and the notion of “mobility as a service” in a post-pandemic society will challenge the sector to respond or be left behind by disruptors. Addressing all of these will take investment and, for that, the UK must improve its competitiveness.
Our 2021 report, “Full Throttle”, sets out a plan to enhance UK automotive competitiveness, providing a series of proposals including upskilling the workforce, providing energy cost relief, reforming business rates to encourage investment, building out 60 GWh of gigafactory capacity by 2030 and creating a Build Back Better fund to support advanced manufacturing. All are essential if the UK automotive sector is to thrive in the future.
SMMT remains committed, therefore, to promoting the entire industry. We will continue to deliver a wide range of in-person and online events, as well as focussing on diversifying and developing our own staff. We are also enhancing our data and intelligence services whilst supporting members as they transition to new technologies, whilst continue to provide unparalleled advice on domestic and international issues.
We can look therefore forward to 2022 with some optimism. We enter the year carrying the after effects of 2021, but SMMT will ensure the sector’s voice is heard, that its major priorities are understood by policymakers and that the whole of the UK automotive market and manufacturing continue to thrive.