UK car manufacturing hits high but industry warns of Brexit effect

Thursday, November 10, 2016

 

In the first six months of 2016 over 900,000 cars were built in the UK, with industry figures claiming that this is the highest figure achieved since 2000. 

 

However, the future of British car manufacturing looks to be uncertain following Brexit. With British car manufacturing hitting a new 16-year high, the industry predicts that the future of jobs, investment and growth is at risk when Britain eventually leaves the EU.

 

Almost 1 million cars rolled off the production lines of UK factories in the first few months of the year. These figures have highlighted a massive increase from the same period in 2015, presenting an almost 13% rise.

 

According to the Society of Motor Manufacturers and Traders (SMMT) the billions of pounds previously invested in new models has now come to fruition. Of the cars built in UK factories in the first half the year, 78% were to be exported to other countries with the largest proportion destined for the EU market.

 

The SMMT’s chief executive, Mike Hawes has said the outlook for UK car manufacturing is uncertain since Britain opted to pursue a future outside the EU.

 

Mike announced that: “The latest increase in production output is the result of investment decisions made over a number of years, well before the referendum was even a prospect.

 

“These decisions were based on many factors but primarily on tariff-free access to the single market, economic stability and record levels of productivity from a highly skilled workforce. To ensure the sector’s continued growth, and with it the thousands of jobs it supports, these must be priorities in future negotiations.”

 

The SMMT’s survey of its members, including major car manufacturers Nissan, Toyota and Mini and smaller businesses, highlighted that companies were worried about issues such as Britain’s relationship with the rest of Europe following the Brexit vote. 

 

With up to 60% of the parts supplied for cars being assembled in the UK being imported from Europe, 57% of SSMT members surveyed believed Brexit would have a negative impact upon their businesses.

 

Amongst the biggest concerns noted, were the potential introduction of tariffs and custom charges, which may create a negative impact and put up barriers between the UK and the EU. 

 

Further concerns expressed by the members include a loss of access to EU trade deals, being bound by regulations in their biggest export market and the industry experiencing a loss of access to skilled workers from within the EU.

 

SMMT also stated that: “The UK automotive manufacturing sector has grown dramatically over the past few years and now employs 169,000 people, including many skilled EU nationals recruited to fill vacancies which the local labour force could not meet. The lack of certainty regarding the future status of these workers in the UK was cited frequently as a concern.”

 

The British car industry has experienced a prolonged period of growth. In June this year, car production rose by 10.4% to almost 159,000 vehicles, the highest number recorded for the month since 1998.

 

With sales of new cars in the UK falling after Brexit, for the second time in only 4 years, industry leaders have stated that the British consumer was less confident in spending their money on large items in times of uncertainty.

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