UK-based car manufacturing plants could still make a record two million cars by 2020 - but hitting that goal hinges on positive government support for the industry in the wake of the Brexit vote, according to the Society for Motor Manufacturers and Traders (SMMT).
The news comes as the UK car manufacturing industry recorded its 11th consecutive month of growth, building 158,641 cars, up 10.4% month-on-month. That figure confirmed the industry’s best performance in the first six months of a year for 16 years and is the highest figure for June since 1998. Jaguar Land Rover is currently the biggest car maker in Britain, having eclipsed Nissan’s output from its Sunderland plant in 2015.
The rise was driven by exports, with demand in 2016 up 14.9% and accounting for 695,139 units of the total of 897,157 manufactured to date. Production for the home market also rose 7.1%. Britain is Europe’s third largest car manufacturer, behind Germany and Spain.
“It’s clear that the current mood of political and economic uncertainty is praying on the minds of the car industry,” said the SMMT’s chief executive, Mike Hawes. “But the industry will do its best to manage its way through this situation.
“There is still a chance that UK car manufacturing could hit two million units by 2020, as we were predicting pre-Brexit. A lot will depend on being able to secure investment to build plants for new products, and to do that we need a clear signal from government that the UK remains open for business and is committed to free trade.
“Brexit creates uncertainty, but we can point to the productivity record of the plants here - which are the best in Europe, or among the best, and as long as we remain competitive and prove we can deliver then we can fight for that investment.”
Hawes highlighted potential incentives that government could offer to the industry as tax credits against research and development spending, a change in how business rates are applied, a new framework for attracting overseas workers and promotion of the car industry abroad by key officials.
The highest number of cars made in the UK in a year was 1.92m in 1972. Last year 1,587,677 cars were made in the UK, a rise of 3.9% year-on-year.
Around £10 billion has been invested in manufacturing facilities in the UK by car manufacturers in the past four years, and Hawes said that maintaining that momentum would be key if the industry was to keep growing. He added that 59% of components on UK-built cars are sourced from abroad, and the majority from Europe, opening up another potential complication.
“The key concerns among the industry are the potential impact of tariffs, custom charges or other barriers between the UK and the EU single market, the loss of access to EU trade deals, being bound by regulations to the EU without having a say on them and the loss of access to the EU-wide skills market.”
The SMMT has surveyed its members - who range from OEM manufacturers and importers to component suppliers - on the Brexit vote, with 57.1% saying they expect the decision to leave the EU to have a negative impact on the industry, 24.9% saying it is too early to say, 8.3% expecting a positive impact, 6.9% saying it will have no impact and 2.8% saying they don’t know.