The UK automotive industry has announced a 10 point plan following the UK Government’s Industrial Strategy to deliver £50bn in growth and ensure the country is in the top 15 global vehicle manufacturing locations.
The strategy comes as a new SMMT report, The Competitive Edge: Driving Long-Term UK Automotive Growth, sets out a path to success.
The report charts the industry’s fundamental strengths and potential, with more than half of businesses having recently secured, or planning for, investment. But it also reveals low confidence in global trading conditions, and doubts about the ability to meet net zero ambitions, amid rising costs and falling profitability.
The Competitive Edge: Driving Long-Term UK Automotive Growth sets out 10 recommendations:
- Introduce transformative new support to supercharge the market, including a major purchase incentive scheme for consumers for the duration of the mandate, and maintenance and extension of support for harder to decarbonise segments.
- Publish a clear roadmap for bus, coach and heavy-duty vehicle decarbonisation co-developed with industry.
- Ensure everyone has a ‘right to charge’ by mandating delivery of public charging and refuelling infrastructure across the UK.
- Ensure the UK’s competitiveness prospectus and role of the Office for Investment to promote the UK’s offer is geared to support new and existing investors.
- Reduce the cost of energy and support manufacturers to remain internationally competitive.
- Provide step-change supply chain funding to de-risk private investment into competitiveness building activities.
- Follow through on the promise to allow 50% of the apprenticeship levy to be spent on non-apprentice training.
- Maximise and develop the EU-UK economic relationship to protect and grow the European automotive sector.
- Deliver on the foundations of the UK-US Economic Prosperity Deal to maximise automotive exports.
- Secure trade agreements with new and existing trading partners which place automotive at their core.
Almost three quarters (73.5%) of the CEOs surveyed said their business costs had increased in the last year, with 46.9% reporting falling profits.
Rapid implementation of the reforms to industrial energy costs set out in the Industrial Strategy would cut the sector’s electricity bill by a fifth, helping ease this structural disadvantage, it said.
The SMMT added that to “level the playing field”, the proposed relief on standing charges – which will apply to battery manufacturing – should also benefit automotive manufacturing, given the sector will become more electricity-dependent as it increasingly builds EVs.
It added that “bold government action” would drive up demand for the electric vehicles, including amendments to the Expensive Car Supplement and cuts to VAT on new EVs and public charging.
But the SMMT added that there was “room for optimism”, including the UK-US trade deal and FTA with India and an EU reset. Together with rapid measures to reduce electricity costs and business rates, reformed capital allowances and a reskilled workforce, the sector’s competitive edge would be restored, providing an additional £50 billion economic windfall, it added.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), said:
“Government’s long-term Industrial Strategy, including the Drive35 £2.5 billion auto capital and R&D fund, recognises automotive as a pillar of advanced manufacturing, integral to the world leading innovation that creates the high value jobs, wealth and economic growth that are vital to our country’s future.
“Now we must make the most of that position and put in place the right conditions for growth.”
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