Car manufacturers need right Brexit settlement to capitalise on 60% production boost

The UK’s specialist, low volume car manufacturing industry is set to enjoy a 60% production boost by 2020, thanks to increasing global demand – but all could be lost if Brexit talks fail to deliver safeguards.

The manufacturers – which include Warwickshire-based Aston Martin and Coventry’s London Electric Vehicle Company (formerly London Taxi Company) – said that unless the industry receives the political support to deliver a competitive environment then the strong potential may be lost.

They said what was needed was a future relationship with the EU that safeguarded as many of the current benefits of membership as possible.

In its latest UK Specialist Car Manufacturers Report, trade body the Society of Motor Manufacturers and Traders confirms Britain is home to the largest and most diverse specialist car manufacturing sector in the world, with some of the most globally recognised and iconic brands.

The sector is a global leader in engineering, design and craftsmanship, producing a wide range of cutting-edge products, from high performance sports cars, luxury grand tourers and SUVs, to electric taxis and wheelchair accessible vehicles.

Latest figures show that in 2016 these car makers turned over a collective £3.6bn, up 52% from 2012. In addition, they employed 11,250 people – an 11.5% increase on five years ago – the majority in highly skilled, specialist roles, while also supporting tens of thousands additional jobs across the supply chain.

Thanks to an increasing number of affluent buyers and new markets taking an increasing interest in performance driving and luxury models, production is on an upward trend. Output has risen by a quarter (25%) since 2012 and, by 2020, it is forecast to surge 60%, from the current 32,000 units to some 52,000.

The sector is an important contributor to the UK economy, with 65% of the vehicles it produces exported to markets worldwide, including the EU, United States, China, Japan and the Gulf States.

Meanwhile, it supports an equally diverse UK supply chain, sourcing, on average, two thirds (65%) of vehicle content from local tier one companies and a further 30% from across the wider EU.

The SMMT said the industry therefore needed political leadership that delivered a competitive environment, globally, and a future relationship with the EU that safeguards as many of the benefits currently enjoyed as possible.

The ability to influence global industry standards and regulations post Brexit is also of significant concern.

The UK’s Specialist Car Manufacturers

It said major advances in light-weighting, including the use of carbon fibre and composites, as well as aerodynamics and powertrain electrification, had often been led by specialist car brands in the UK. To support this high-tech innovation, specialist car manufacturers need regulations that recognise their specific requirements such as limited production runs, investment levels and niche skills, which differ from those of brands making cars for the mass market.

Some EU regulations already provide for these considerations but the SMMT said it was crucial the sector’s specific needs were recognised globally.

This means early and effective consultation, suitable lead times and, where appropriate, flexibility in how specific objectives are delivered. Global harmonisation of technical regulations would also help as brands typically build a single model and sell it into as many markets as possible.

Reducing international regulatory complexity would lower the administrative burden and maximise investment.

Mike Hawes, SMMT chief executive, said: “Our specialist car manufacturing sector is one of the UK’s global success stories – making world-leading products and pioneering next generation technologies that benefit everyone.

“For this to continue we need certainty on Britain’s future trading relationships, including customs plans, market access, regulations governing the design, production and approval of vehicles, and rules around movement of skilled workers. This will provide the assurance the sector needs to remain competitive and make investment decisions that enable it to continue to develop innovative, exciting and desirable products that are the envy of the world.”