A new report says Britain's automotive industry looks set to continue its growth thanks to increased demand abroad and the development of cutting edge tech.
Published by EEF and Santander, the reports offers reasons why the UK automotive industry is flying high, highlighting increased demand for UK exports alongside the development of cutting-edge technologies that are being demanded by manufacturers and consumers across the world.
Despite the UK being the 13th largest automotive manufacturer in the world, it exports a larger proportion of automotive output than countries such as India, Brazil and France according to the report. The vast majority of British exports are vehicles, which was worth £25.5bn in 2015 followed by parts for vehicles, which was worth £4.2bn – meaning the UK is rated 9th in the world in terms of exports by value.
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The report goes on to predict that increased exports will help the UK car industry to grow, particularly with the fall in the value of the pound which has made UK exports more competitive overseas. The report also says that exports have already seen the positives of a weaker pound after growing by 16% in the 11 months to November 2016 compared to the same period the year before.
As well as exports, it has been suggested that a focus on new technologies will also be a central driver to the growth of the UK automotive industry. The Society of Motor Manufacturers & Traders (SMMT) predicts that autonomous and connected vehicles will add more than £50bn a year to the UK economy by 2030. SMMT also believes that autonomous vehicles could create 25,000 jobs in the sector and increase GDP by 1% by 2030.
The latest ONS manufacturing data shows that the UK automotive sector has seen year-on-year growth of £592m in sales between 2014 and 2015. The industry was worth upwards of £36bn to the UK economy in 2015 and is expected to post another record year of production when the figures are released for 2016.
Head of manufacturing at Santander UK, Charles Garfit commented: “Early indications are showing that 2016 was a very successful year for the automotive industry in the UK, as brand Britain continued to grow in popularity and demand for UK cars increased. Despite changeable economic and political conditions, there are plenty of opportunities for manufacturers to offset this potential risk by tapping into other markets.
“Growth in exports is likely to be driven by the economies of China, India and the Middle East where rising GDP and household incomes will result in tens of millions of people becoming vehicle owners for the first time in the coming years, representing a fantastic opportunity for UK car manufacturers.”
Senior economist at EEF, George Nikolaidis added: “By putting the spotlight on a growing sector at the forefront of new technologies, processes and products, the report highlights how industry can help deliver a more innovative and productive economy over the long-term. There is a clear role for the government to support industry in this process, by developing a coherent Industrial Strategy that anchors manufacturing investment in UK shores.”