Opinion

UK cars becoming increasingly British

5 min read

17 March 2015

Britain's automotive industry is still going strong. In 2014 the UK built over 1.6m cars and 2.5m engines, of which exports accounted for 80 per cent of production. With the nation being the second largest producer of premium cars in the world, the opportunity for automotive suppliers to invest in the UK has never been more valuable, offering local sourcing of components that UK vehicle makers require.

The government’s view is that the supply chain has been “hollowing out” since the 1970s. Evidence exists that as long as 1906 there were “concerns over the availability of UK sources of automotive parts supply, with wheels and springs among commodities that were mainly imported”.

It was further suggested that: “The automotive export earnings approached £35bn worth of cars, parts and related products in 2014. This accounted for seven per cent of the UK’s entire export earnings. However, the sector continues to record a large deficit, with nearly £48bn worth of cars and parts imported that same year. The UK market is being dominated by imported products.”

There are now signs that a corner was turned.

British cars are being made with more British-sourced parts as the UK automotive industry’s renaissance continues. Figures from a new Automotive Council report show that domestic component makers sold 19 per cent more products to UK vehicle producers last year than in 2013.

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The figures are an important step in the right direction for the UK automotive supply base. Currently around one third of the components in a UK-built car are domestically sourced, compared to more than 90 per cent in the mid-1970s. However, vehicle manufacturing in the UK is undergoing rapid growth – British car production has increased by more than 50 per cent since 2009, and this is creating new opportunities for domestic suppliers.

The report explained: “In 2009 the global automotive industry was enduring a major contraction in demand following the financial crisis. Over the course of the next two years, 25,000 jobs were lost from the supply chain as the sector contracted by more than a quarter. Although the UK automotive industry had transformed itself from a sector with turbulent labour relations and a poor reputation to one of the most productive in Europe, a drive to ‘low cost’ sourcing caused an increasing trend towards purchasing parts from overseas.”

Since UK output bottomed out at just over one million vehicles in 2009, the industry has experienced a strong recovery. In financial terms, the industry is growing more than the vehicle numbers would suggest.

“2014 saw major investment announcements and product launches, while 2015 will see new models from several UK carmakers that will boost output in both unit and value terms, and generate significantly increased exports,” the report claimed.
 
Nifco, a plastics supplier to vehicles makers based in Stockton, North East England, was on the brink of closure in 2004. However, the business has since turned around with increased demand and funding support leading to the construction of two new factories in 2012 and 2014.

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Mike Matthews, managing director of Nifco UK, said: “There is a renewed optimism and confidence in the UK automotive industry and this is reflected in our future projected growth. Our order book is full for the next five years and we have a clear strategy to grow the business into a £75m company by 2016 and £100m by 2018. We are moving our offer on, working closer than ever with our customers to develop products that help them to innovate.”

The new Luton-built Vauxhall Vivaro van is another example of the recent upturn in local supply. The latest model, which started production last year, contains more than twice the number of British-sourced components at 40 per cent than its predecessor’s 16 per cent. This means an extra £600m will be spent with British suppliers, allowing local companies to expand. In some cases it has saved whole factories.

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