Car output increase boosts supply chain
AUTOMOTIVE supply chain firms across the West Midlands have been buoyed by latest UK car production figures, which show a sharp rise.
According to the Society of Motor Manufacturers and Traders car output in January increased 64.8% – the biggest gain since May 1976.
Despite an increase in VAT, the extension of the Government’s scrappage scheme is thought to have acted as an incentive to manufacturers and buyers.
However, the figure – which equates to 101,190 vehicles – is on the back of such low volumes compared with the year before that drawing any meaning comparisons from it are difficult.
Nevertheless, Rachel Eade, Programme Manager at West Midlands automotive supply chain network Accelerate, welcomed the increase and the ripple effect it was having on the region’s supply base.
“Anecdotal information we were getting from suppliers in December and the first weeks of the New Year suggested an increase in volumes and enquiries for new business and this has been reflected in the latest figures.
“Things are still tough for our companies, but there is a genuine sense of optimism that the upturn will continue and the big car makers and tiers 1s are looking to increase their stock levels in order to cope with increased demand,” she said.
Longer term, she said she hoped the Government’s decision to make the region a Low Carbon Economic Area for Advanced Automotive Engineering, which Lord Mandelson announced during a visit to the Warwick Manufacturing Centre last week, presented a whole host of new opportunities for firms willing to be innovative.
There was also good news for the commercial vehicle sector, which saw an increase in production of 9.6% last month – the second consecutive monthly rise. Engine production was up 26.3%.
The SMMT said the data suggested a modest growth in the automotive sector for 2010 – welcome news after last year, which saw a 25-year low for the industry.
“Vehicle and engine production rose for a third successive month in January, demonstrating the continued success of global scrappage incentive schemes,” said Paul Everitt, SMMT chief executive.
He added that despite the closure of the scrappage scheme next month, there were still reasons to be optimistic.
“SMMT expects a modest recovery in 2010 output as economic growth, a competitive exchange rate and the introduction of new models to UK plants help to lift manufacturing levels above those seen in 2009,” said Mr Everitt.
The scrappage scheme, which offers a £2,000 incentive to scrap old cars and buy new ones, has seen more than 300,000 new cars registered since its introduction last year.
Korean manufacturers such as Hyundai and Kia have been the main beneficiaries although Ford, Toyota and Fiat all make the top five biggest selling firms.
