Innovation and Exports to drive continued success of UK Automotive Industry

Innovation and Exports to drive continued success of UK Automotive Industry

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While the UK is the 13th largest automotive manufacturer in the world, according to the automotive sector bulletin from Santander and EEF, it exports a larger proportion of total automotive output than key competitors like France, Brazil and India. This pushes the country up to 9th place for exports by value. The lion’s share of exports are cars, worth £25.5 billion in 2015, followed by parts for motor vehicles, worth £4.2 billion.

Looking forward, the Santander and EEF report predicts that increased exports should help the UK car industry further, particularly as the fall in the value of the pound has made UK products more cost competitive. Indeed, this has already been good news for the UK automotive sector with exports growing by 16% in the 11 months to November 2016 compared to the same period last year. 

In addition to exports, a focus on new technologies will also be a central driver of revenue growth. The Society of Motor Manufacturers & Traders (SMMT) predicts that connected and autonomous vehicles are set to add £51 billion a year to the UK economy by 2030. The production of autonomous vehicles could also lead to an increase of 25,000 jobs in the sector as well as a cumulative increase of 1% in GDP by 2030.

Analysis of the latest ONS manufacturing data by Santander has found that the UK automotive sector saw year-on-year growth of £592 million in terms of sales between 2014 and 2015 and was worth £36.5 billion to the UK economy in 2015. The UK car industry is likely to have posted another record year of production in 2016.

However, there is a range of fresh challenges that the sector will have to grapple with over the next few years including the macroeconomic environment and the impact of the UK’s departure from the EU. The Government has a role to play in ensuring manufacturers are properly equipped to deal with these challenges; continued innovation support underpinned by a coherent Industrial Strategy should help ensure automotive investment remains anchored in the UK. 

Charles Garfit, Head of Manufacturing at Santander UK commented: “Early indications are showing that 2016 was a very successful year for the automotive industry in the UK, as brand Britain continued to grow in popularity and demand for UK cars increased.  Despite changeable economic and political conditions, there are plenty of opportunities for manufacturers to offset this potential risk by tapping into other markets.

“Growth in exports is likely to be driven by the economies of China, India and the Middle East where rising GDP and household incomes will result in tens of millions of people becoming vehicle owners for the first time in the coming years, representing a fantastic opportunity for UK car manufacturers.”

 

George Nikolaidis, Senior Economist at EEF said: “This report delves deep into the automotive sector, one of a number of manufacturing success stories over the past few years. By putting the spotlight on a growing sector at the forefront of new technologies, processes and products, the report highlights how industry can help deliver a more innovative and productive economy over the long-term. There is a clear role for the Government to support industry in this process, by developing a coherent Industrial Strategy that anchors manufacturing investment in UK shores.”

As a region, Europe is still the top destination for UK automotive exports at 50% of all international sales. However, the countries which represent the best opportunities for growth are diverse: automotive exports from the UK to Saudi Arabia have grown by 307% from 2010-2015, followed by South Korea at 300%

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