Global demand drives 23.5% increase in UK car production

EXPANSION announcements by motor manufacturers Jaguar Land Rover and Nissan have instilled further confidence into the UK automotive industry, a Midlands-based analyst has said.

John Leech, head of automotive at KPMG, said demand from the emerging markets was helping to fuel much of the growth.

His comments come as latest figures from the Society of Motor Manufacturers and Traders shows UK car production rose 23.5% in February – and is up almost 20% in the year-to-date. In addition, engine production grew by 3.6% and is 4.3% up for the year.

The only slight disappointment was a 2.7% fall in commercial vehicle output, which is down 2% for the year-to-date.

“The UK auto sector continues to power ahead as car production rose again in February compared to a year ago. This trend is being supported by export-led growth from the emerging markets through premium car manufacturers,” said Mr Leech.  

“Recent announcements of major investments by Jaguar Land Rover and Nissan have instilled further confidence into car manufacturing companies in the UK and their supply chains.

“We expect further volume gains in the months ahead. However, a major concern for many car companies is around the availability of skilled engineers. Debt and equity finance which at the moment is constrained is also becoming a worry for the industry.”

Paul Everitt, SMMT chief executive, said the figures confirmed the importance of manufacturing to a rebalanced and prosperous economy.

“The UK automotive sector continues to attract investment and generate new jobs. Despite recent success there can be no complacency and it is essential the Chancellor uses next week’s Budget to deliver on its growth strategy and boost the UK’s competitiveness by encouraging private sector investment in R&D, capital equipment and skills,” he said.
 
Mr Leech said the manufacturing sector would be paying close attention to what the Chancellor said.

“What will support manufacturers in the UK is private sector investment in research and development, a freeze on business rates and a focus on skills development in innovation and technology.  Above all, manufacturers expect and want more ‘above the tax line incentives’ which can be more widely accessed by the industry than the anticipated package of corporation tax breaks,” he added.