Investment into the UK Car Industry Slows

The head of the UK automotive trade body has reported that investment in the UK’s automotive industry fell last year, after it had received strong growth throughout 2014 and 2015.

Furthermore, it appears as though there are also halted investment agreements, resultant of the UK Brexit decision.

This is more than likely just a precautionary measure on the behalf of investors, whilst the UK substantiate their trading agreements post-Brexit.

Chief executive of SMMT, Mike Hawes comments on the recent reports on decreasing investment at Tuesday’s Treasury Committee, saying that:

“We are putting together the data as best we can,” he said. “But I sense certainly that the amount invested over the last 12 months will not be as high as the preceding one, two, three years.”

Hawes further comments that:

“Certainly, I believe that companies are at least sitting on their hands… until there is a bit more clarity”.

Contrary to the state of investment in the UK’s car industry, statistics evidence strong growth in UK car production in recent years, which leads to speculation that a reduced amount of investment in 2017 may hinder production rates moving into the New Year.

SMMT recently released their 2016 Automotive Sustainability Report, which details funding to the industry. It showed that investment in 2015 reached £2.5bn, which was an 8.7% increase on 2014.

Though it may be easy to read reports of decreased investment figures and worry that the automotive industry will take a nose dive, it is instead perhaps more sensible to consider the prospect that investment figures will return to normal towards the end of the first quarter, especially seeing as 2017 has already seen a flourishment of opportunities in the Automotive sector.

Indeed, Nissans confirmation of the Quashqai and X-Trail development and construction in Sunderland will lead to thousands of job opportunities within the sector, and following suit, Aston Martin’s recent plans to create its newest model in South Wales will also lead to an expected 750 new job positions.

Hawes also commented on these announcements, stating that:

“It was great news that Nissan did commit there…each individual manufacturer will be in a different position. You can’t draw too many conclusions from one manufacturer.”

It seems as though 2017 is a crucial time for the car industry, funding from outside the UK is essential to both automotive development and production, and trade agreements need to be established in order to allow the UK to be at the forefront of both.

Tony Burke, assistant general secretary of the Unite union enforces this notion, stating: “Dozens of decisions, including new models to UK plants, must be made in the coming months. These crucial investment decisions will determine the future of the UK’s car industry and wider manufacturing supply chain.

“While many workers voted to leave the EU, they didn’t do so to be out of work or see their living standards suffer and rights at work torn up through a hard Brexit.

“The government needs to give the UK automotive industry certainty to unlock investment and ensure it continues to be a world leader.”

David Bailey, professor of industrial strategy at Aston Business School also comments on fears surrounding the future of investment into the UK’s automotive sector, he argues that Brexit created much uncertainty and fear surrounding the auto industry.

“The Brexit vote leaves considerable uncertainty over the nature of the UK’s trading relationship with the EU…that uncertainty has the potential to impact on foreign investment in the UK auto sector, especially when auto firms are looking to replace models.

Bailey concludes by saying that: “Plants and jobs could be at risk if that uncertainty isn’t ‘nailed down’ as quickly in the form of clear parameters for a trade deal – and preferably one that is as close as possible to existing single market arrangements.”

2018-01-21T16:38:49+00:00January 28th, 2017|