UK automotive driving the manufacturing sector 

The UK automotive sector is in a period of sustained growth, overcoming challenging export conditions, investing highly in research and development and leading the way to the long term future success of the whole UK manufacturing sector.

Research from The Society of Motor Manufacturers and Traders (SMMT) found that that UK automotive manufacturing sector had its best year for a decade, making more cars than any year since 2005.

  • Car manufacturing in the UK hits a 10-year high (growing 3.9% to 1,587,677 vehicles)
  • More cars exported than ever before (growing 2.7% to 1,227,881 vehicles)
  • Increasing demand for British cars sees domestic production rise (growing 8.1% to 359,796 vehicles)

UK automotive sector achieves period of year-on-year growth

Chris Hill, Partner at Hawsons, commented: “Following a year when the global automotive sector made the headlines for all the wrong reasons, it is refreshing to see the UK automotive manufacturing sector continue to flourish. The number of cars manufactured in the UK is yet to reach the goal of two million or more vehicles by 2020, but over the past three or four years the sector has achieved a period of noteworthy year-on-year growth.”

“UK car manufacturing has a long heritage of first-class innovation and design and on the back of increased business and consumer confidence the sector is going from strength to strength. We have spoken in detail about the number of UK manufacturers driving growth and productivity through innovation and reinvention.”

“Our last manufacturing newsletter talked about research from the government which highlighted that the UK manufacturing sector now accounts for almost a third of all R&D claims submitted in the UK, equating to over £600m of relief claimed. The UK automotive sector epitomises this strive for innovation; developing new models, new systems, new production facilities and new ways of working. There is undoubtedly a sustained drive towards innovation and the pace of technological change is accelerating…and it’s paying off.”

How is the UK automotive manufacturing sector breaking new records?

“The automotive sector is not unlike many other of the UK manufacturing sectors in which British companies are perhaps struggling to compete on a global level – there are significant opportunities for growth, but fierce competition, increases in labour costs and a lack of qualified and skilled engineers.”

“I think one of the big differences however is the sector’s upturn and success in exporting. Despite the ongoing export challenges that an increasingly strong pound brings the UK automotive sector last year exported more cars than ever before. Nearly four out of every five cars that are manufactured in the UK are exported; highlighting continuing strong foreign demand.”

Challenges ahead for the sector

One of the biggest challenges facing the UK automotive sector (and the manufacturing sector as a whole) is the shortage of skills. A recent report indicates that there are around 5,000 vacancies in the automotive sector, with the struggle to recruit and retain highly skilled workers holding back further growth. It is very important that the sector overcomes the shortage of skilled workers to maintain its high productivity levels; productivity levels that have been the driving force behind the success of the sector in recent years.

Chris added: “Although there are many challenges still to be met – such as rising regulatory costs, rising energy costs, the improving strength of the pound, increases in supplier costs as they look to pass on rising wage bills, the skills gap, technology and automation – it looks like the UK automotive sector is poised to continue its positive developments and make more cars than ever before.”

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Chris Hill Senior Partner

Chris Hill acts as commercial partner for both corporate and non-corporate clients and has worked for Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Chris on [email protected] or 0114 266 7141.