How the U.K’s car man­u­fac­tur­ing sec­tor is hold­ing up

Business a.m. - - MANUFACTURING - Busi­ness a.m.

AC­CORD­ING TO THE SO­CI­ETY of Mo­tor Man­u­fac­tur­ers and Traders (SMMT), the UK recorded a 17-year high for car man­u­fac­tur­ing in March 2017. There were more than 170,691 ve­hi­cles pro­duced through­out that month at plants based in the UK, which was up by 7.3% com­pared to March 2016.

The re­lease of the new reg­is­tra­tion plate means that March is ob­vi­ously al­ways a busy month for those work­ing in the car in­dus­try. March and Septem­ber are al­ways fore­cast to be the in­dus­try’s busiest months for sales, mean­ing man­u­fac­tur­ing is also up in the months of March and Septem­ber to meet the high de­mand for new reg­is­tra­tions.

But 2017 saw the most cars pro­duced in Q1 than the past 17 years – 471,695 units in to­tal, a 7.6% in­crease on pre­vi­ous years.

The high qual­ity of ve­hi­cles from UK man­u­fac­tur­ers or built on Bri­tish shores have also re­sulted in the au­to­mo­biles re­ceiv­ing recog­ni­tion both do­mes­ti­cally and in­ter­na­tion­ally. For in­stance, Range Rover won ten awards within the three months of pro­duc­tion, and the Evoque se­cured 22 in­ter­na­tional awards. The Nis­san Qashqai has been the win­ner of over 13 global awards too, while the Jaguar e-pace was named Top Gear Mag­a­zine’s 2017 Cross­over of the Year among other pres­ti­gious feats. As UK man­u­fac­tur­ers are con­tin­u­ously recog­nised on a global scale for the high qual­ity of their ve­hi­cles, it’s no sur­prise that global de­mand is driv­ing the UK’s car pro­duc­tion in­dus­try.

De­mand over­seas for cars man­u­fac­tured in the UK

More than 130,000 of the 170,691 cars pro­duced at UKbased plants dur­ing March 2017 were shipped abroad. This is a 10.6% in­crease on March 2016’s global ex­port­ing. The US were a par­tic­u­larly large cus­tomer for the UK in 2016, in­creas­ing their ex­ports to 47.2% and now ac­count­ing for 14.5% of the UK’s car ex­ports, mak­ing them the UK’s sec­ond big­gest mar­ket be­hind the EU.

Com­pared to the pre­vi­ous year, ex­ports to the EU also in­creased by 7.5%. This demon­strated con­tin­u­ous pro­gres­sion for global ex­port­ing. A to­tal of 758,680 cars were ex­ported to the EU in 2016, which was ac­count­able for half of all over­seas ex­ports last year. In fact, more than one in two ex­ported cars were to Europe – and out of all the cars man­u­fac­tured in the UK, around eight out of ev­ery ten cars are ex­ported over­seas. It is clear that ex­ports are driv­ing the UK’s new car pro­duc­tion, with the UK ex­port­ing to over 160 coun­tries world­wide.

De­mand do­mes­ti­cally for cars man­u­fac­tured in the UK

The pos­i­tive news about the global ex­ports of cars built in the UK un­for­tu­nately doesn’t seem to have been car­ried across when look­ing at de­mand do­mes­ti­cally. Fol­low­ing the vote for Brexit, the UK’s do­mes­tic home de­mand has dropped. De­spite not hav­ing much of a dent on the pro­duc­tion vol­umes, some in­dus­try ex­perts have raised con­cern, at­tribut­ing the drop to fears of the UK econ­omy and un­cer­tainly about leav­ing the EU.

If any­thing though, the de­cline should high­light just how im­por­tant global ex­ports are for Britain. In Q1 alone, over­seas buy­ers placed or­ders for more than 76% of the UK’s out­put.

Con­cerns sur­round­ing Brexit

As Brexit draws ever nearer, a dark cloud con­tin­ues to hang over the UK’s car in­dus­try. Ac­cord­ing to the SMMT, car man­u­fac­tur­ing in the UK dropped by 9.8% in Oc­to­ber and un­cer­tainty re­gard­ing Brexit was blamed for the de­crease along­side model changes and mar­ket tur­bu­lence. Ve­hi­cle pro­duc­tion for mar­kets over­seas also de­creased 9.3%, though ex­ports still make up 82.7 per cent of the en­tire out­put.

Mike Hawes, the chief ex­ec­u­tive at the SMMT, com­mented: “The fifth con­sec­u­tive month of de­cline for UK car man­u­fac­tur­ing is un­doubt­edly con­cern­ing and, while a num­ber of fac­tors have been at play, there is no doubt that busi­ness and con­sumer un­cer­tainty is hav­ing a sig­nif­i­cant im­pact.

“With eight in ten Bri­tish­built cars des­tined for over­seas mar­kets, the ma­jor­ity to the EU, the sec­tor’s de­pen­dence on ex­ports can­not be down­played. Europe is our largest trad­ing part­ner and se­cur­ing the right Brexit agree­ment which al­lows free and fric­tion­less trade is vi­tal for the fu­ture health of our in­dus­try.”

Could it be that the used car mar­ket re­ceives a boost from Brexit though? Ex­perts have pre­dicted that prices for new car mod­els will in­crease as the pound gets weaker and other fac­tors come into play while the UK is ex­it­ing the EU, so fo­cus may pos­si­bly shift and mo­torists may fo­cus their at­ten­tion on the sec­ond-hand car mar­ket.

All will surely be­come much clearer when Brexit comes into force at 11pm on March 29th 2019.

If any­thing though, the de­cline should high­light just how im­por­tant global ex­ports are for Britain

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