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New data from the Society of Motor Manufacturers and Traders (SMMT) has found that the sector is starting to rebound from the effects of the coronavirus pandemic and Brexit uncertainty. The analysis suggests that the automotive industry being able to return to a state of growth could be worth an additional £14billion to the UK economy next year alone.
Following five years of Brexit uncertainty, two years of lockdowns, and crippling global supply chain issues, the sector’s recovery is expected to gain momentum in 2023.
The new car and van market outlook anticipates an impressive growth rate of 15 percent next year, worth £10billion.
There is also the further potential for growth in 2024, which could deliver a cumulative £25billion win for the economy.
Manufacturing is also set to get a boost, with the SMMT describing the situation as “equally promising”.
Easing semiconductor shortages are expected to help light vehicle output rise by 15 percent in the next 12 months to 984,000 units, an uplift worth almost £4billion.
By 2025, production volumes are projected to surpass one million vehicles, a far cry from the past few years.
To help ensure the growth continues, the sector is calling for a targeted Government action plan to safeguard the future of advanced automotive manufacturing and the thousands of British jobs it sustains.
It is forecast that this could help the sector blossom, with the new investment helping to deliver on long-standing targets.
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This would provide help for battery and fuel cell production, support skills and innovation and deliver the incentives and infrastructure needed to drive a healthy zero emission vehicle market.
Addressing 1,000 members of industry and Government at the sector’s Annual Dinner this evening, Alison James, SMMT President and Senior Vice President Global Circular Economy at Stellantis, called for help for the industry to “thrive”.
She added: “UK Automotive is an agile sector that doesn’t just embrace change and innovation, we lead it.
“But we face fierce global competition and in the global race to net zero we must be as attractive – more attractive – than rival countries against whom we will compete for investment.
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“We have inherent strengths, but to play to them, we need the right competitive framework; a level playing field.
“We are not asking for support to survive, but demanding action so we can thrive.”
The automotive industry is a critical contributor to the UK economy, stimulating growth and employment, as well as providing hundreds of thousands of high-value, highly-skilled jobs.
As Europe’s current second largest market, it is a £77billion global trading player, accounting for 10 percent of total UK goods exports.
But as the sector undertakes its biggest transformation in 120 years – upon which the UK’s net zero ambitions depend – it faces multiple threats.
Economic instability, trade protectionism, regulatory change, a cost of living crisis, skills shortages and soaring energy costs already some 80 percent higher than the EU average, are all acting as a brake on its global competitiveness.
The SMMT is warning that the timeframe to act and help the industry is closing fast.
It references the EU-UK Rules of Origin getting tougher, with 2024 being described as a “looming milestone”, which threatens tariff-free trade of in-demand vehicles.
The Government’s Zero Emission Vehicle (ZEV) Mandate is also set to be finalised and introduced in the coming years, with the urgency of action being self-evident.
Mike Hawes, SMMT Chief Executive, said, “In the most testing of times, growth finally beckons for the UK automotive industry, and as recession looms, that’s growth that should be nurtured.
“We need a framework that enhances competitiveness, enables investment and promotes UK Automotive’s strengths: innovation, productivity and a highly skilled workforce.
“We therefore need swift and decisive, action that addresses the immediate challenges and gives us a fighting chance of winning the global competition. That window of opportunity is open but is closing fast.”
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