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The UK Automotive Industry in the EU – Part One

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The UK’s membership of the EU is a controversial topic, one which divides opinions everywhere. There are a plethora of arguments for and against the membership, social, political and economical, to name a few. Industries will likely be affected across the board, with the automotive industry expecting to experience some significant changes if any of the changes are put into place.

 

The UK automotive sector plays an important role in the overall economy and industry of the UK, accounting for 3% of GDP and providing employment for over 700,000 people including manufacturing, retail and service sectors. The knock-on effects of a change to the UK’s membership in the EU will be felt throughout the automotive industry, whether positive or negative.

In 2013, the UK became the second largest vehicle market and the fourth largest vehicle manufacturer in the EU. It was also the second largest premium vehicle manufacturer in the EU, just behind Germany. Around 77% of all vehicles manufactured in the UK in 2013 were exported – an area that would suffer the worst damage if the UK were to withdraw from the EU and sacrifice the benefits of the EU Single Market.

The UK is home to mix of luxury, premium, volume and commercial vehicle manufacturers, as well as eight F1 teams, who are at the forefront of automotive innovation and brilliance. In the last three years the market has seen significant growth, with over £6 billion worth of investment announced over that time period.

The likes of the Sunderland Nissan factory are considered to be some of the best in the world, winning multiple contracts from the manufacturer against rival plants placed throughout Europe and the rest of the world, and are currently producing one of the most successful small electric cars in Europe, the Nissan LEAF.

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British engineering is considered to be some of the best in the world – vehicles manufactured here consistently receive high accolades for their engineering, design and quality. Below is a small selection of recent awards and recognition received for vehicles manufactured here in the UK:

  • Range Rover: Won 10 awards within three months of commencing production, and the Evoque model in particular has secured as many as 22 international awards.
  • Nissan Qashqai: Has won over 13 international awards.
  • MINI: Has been awarded Supermini winner at the BusinessCar Awards 2014 for the 12th year running.
  • McLaren: Winner of Best Super Car at the Middle East Motor Awards 2013.
  • Nissan LEAF: European and World Car of the Year in 2011 and 2012 Car of the Year in Japan.
  • Ford EcoBoost engine: International engine of the Year 2012 and 2013 and SMMT Award for Automotive Innovation 2013.

Growth in the UK automotive manufacturing industry is expected to continue into the rest of the decade, coupled with an equivalent upturn in the overall economic situation. Supporting this, a number of continued investments have been promised by automotive manufacturers from across the world to secure the long term production of models in UK factories. New vehicles which have gone into, or are due to go into production in UK factories in the coming years include the following:

  • New MINI (November 2013)
  • New Nissan Qashqai (January 2014)
  • New Vauxhall Astra (2015)
  • Multiple new models, including a new aluminium vehicle line in Solihull and engine plant in Staffordshire for Jaguar Land Rover
  • New models for a number of other luxury car manufacturers including Aston Martin, Bentley, Infiniti, McLaren and Rolls-Royce.

Futhermore, investments in automotive research and development (R&D) in the UK have been significant, increasing from 5.3% to 10.1% of total UK R&D spend from 2006 and 2012.

All of these investments will help to increase employment figures in the automotive industry, and stimulate the economy, particularly via export market channels.

The growing strength of the automotive industry is affected by its membership in the EU. The benefits of free trade and free movement of labour (meaning essential skills can be brought into the country) is obvious. However, many industry leaders agree that some of the restrictions put upon the automotive industry by the EU are simply not practical, and can be especially troublesome for smaller companies.

In the coming days we will be discussing the UK’s position within the EU, focusing on the advantages and disadvantages for the UK automotive industry. All statistics have been provided by the SMMT.

Read the next in the series by clicking on the link – Part Two – The EU as an Export Market for the Automotive Industry.

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