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UK carmakers fear trade barriers

The number of cars sold in the UK dropped by 5.7 per cent in 2017, according to industry body the Society of Motor Manufacturers & Traders. 2018 isn’t any different – ratings agency, Moody’s, predicts a further 5.5 per cent drop this year. 

“Brexit has derailed the industry,” says Sarwant Singh t0 BBC News, senior partner and global head of automotive and transportation at consultants Frost & Sullivan.

“The uncertainty causes people not to buy cars.”

Each year, about 80 per cent of the vehicles built in the UK are exported, so continued international trade relations are vital for the automotive sector’s continued prosperity.

Industry executives’ main fear is that Brexit will result in heightened barriers to trade, not only with the European Union, but with the rest of the world too, once the transition period ends on 31 December 2020.

Trading relations with China are also complicated, and may well be subject to even greater complexity in future.

“A UK-China free trade agreement will be neither easy nor clearly advantageous for the UK,” says Bruegel, a European firm that specialises in economics.

Once the UK leaves the Union, the UK will be smaller and therefore in a weaker position during trade talks, so there are no guarantees China will be prepared to offer better terms.

Furthermore, UK’s automotive trade with China, and other growing markets, could suffer, depending on the terms of a post-Brexit trade deal with the EU.

At present, EU customers buy about NZ$25 billion worth of British-made cars per year, accounting for around 53 per cent of the UK’s vehicle exports, according to the European Automobile Manufacturers Association (ACEA).

On the other hand, EU manufacturers deliver 81 per cent of the cars imported by the UK, to the tune of about NZ$75 billion, a trade imbalance that will give the UK leverage during trade talks.

At the same time, about 80 per cent of the parts and components used to build cars in the UK are also imported from the EU, while 70 per cent of the parts and components made in the UK are exported to EU countries.

“Any changes to the deep economic and regulatory integration between the EU and the UK will have an adverse impact on automobile manufacturers with operations in the EU and/or the UK, as well as on the European economy in general,” the ACEA said to the BBC.

It is therefore unsurprising that both the UK and the European car industries want to see a final UK-EU deal that retains smooth trade in the long-term.

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Both new and used imports increase

There were 14,492 used cars imported into the country during July which was a 28.8 per cent increase on the same month last year when 11,249 units were imported. Year to date, 103,740 used cars have entered the country, a 16 per cent increase on the first seven months of 2016’s when 89,036 units had been imported.

New cars’ boom continues with 12,591 units crossing the border last month, and gives a year-to-date tally of 67,547.

Demand for light commercial vehicles saw 618 units imported last month which was a small decrease on 640 units in June.

As usual the vast majority of used imported cars come from Japan with 13,640 units imported in July, a 29.5 per cent increase on the same month last year when 10,533 units were sourced from that market.

Importers brought 452 used cars in from Australia, a 21.5 per cent increase on July 2016’s total of 372. Year to date, 3,437 used cars have been shipped from Australia, a 21 per cent increase on 2806 units during the same time last year. Singapore again rounded out the top three with 122 units down from 187 in June

Both Britain and the United States saw a fall in the number of used cars exported with 135 and 107 units respectively compared to 151 and 112 in June.

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UK market struggles

The Society of Motor Manufacturers and Traders (SMMT) states that the market is falling for the fourth month in a row for new car registrations in the United Kingdom.

According to the SMMT, registrations fell in July from the same time last year, by 9.3 per cent with about 162,000 vehicles sold last month. So far this year, 1.56 million cars have been sold, down 2.2 per cent from a year earlier.

“The fall in consumer and business confidence is having a knock on effect on demand in the new car market and government must act quickly to provide concrete plans regarding Brexit,” Mike Hawes, SMMT chief executive says

The government said last month it was to ban all new petrol and diesel cars and vans from 2040 amid fears that rising levels of nitrogen oxide threaten public health.

“While it’s encouraging to see record achievements for alternatively fuelled vehicles, consumers considering other fuel types will have undoubtedly been affected by the uncertainty surrounding the government’s clean air plans,” Hawes says.

Meanwhile, sales of electric and hybrid cars are growing with a market share of 5.5 per cent. This is up from a year ago when they only held three per cent of the market share.

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NZ govt won’t ban petrol, diesel

The government won’t follow the UK’s lead in banning petrol and diesel-powered vehicles, said Transport Minister Simon Bridges.

The UK, in a bid to tackle air pollution, announced that new diesel and petrol cars would be banned from sale from 2040 as part of a $5.2 billion clean air strategy. By 2050, all cars on British roads will need to have zero emissions. The strategy does not include a scrappage scheme, saying previous attempts were “poor value” for money.

This follows similar bans around the world, including France (sales must end by 2040), India (2030) and Norway (2025).

Bridges said yesterday that the current National government had no plans to ban the sale of combustion-powered vehicles, and instead would focus on incentivising drivers to switch to EVs and plug-in hybrids.

“The Government has an ambitious electric vehicle programme with the aim to double the size of the electric vehicle fleet in New Zealand every year to reach 64,000 electric vehicles by 2021,” he said in a statement.

Bridges said a move from petrol and diesel vehicles to EVs was a “natural evolution”, and “it’s our aim to encourage that switch sooner, rather than later.”

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UK auto industry at record high

The UK automotive industry posted a record turnover of $136.6 billion, marking its seventh consecutive year of growth, according to figures released by the Society of Motor Manufacturers and Traders (SMMT)

Productivity, production output and vehicle sales increased. Light vehicle output grew 8.3 per cent to 2.54 million vehicles, and the report noted a rise in premium and luxury vehicles.

Exports also rose, with 78 per cent of vehicles produced were bound for foreign markets.

Car production in 2016 was at its highest level since 1999, but the SMMT warned in the report the industry shouldn’t get too comfortable with the status quo, and said “it is expected that the industry will change more in the next five years than in the past 50.”

New car registrations rose 2.3 per cent in 2016. Diesel registrations grew 0.6 per cent, and petrol increased 2.7 per cent. Alternatively fuelled vehicles had the largest growth, up 22.2 per cent to 88,919 vehicles registered, representing 3.3 per cent of the total market.  

Employment has grown 11.9 per cent to 109,890 employees, and the number of jobs dependent on the automotive sector in the UK remained stable at 814,000 people. Direct employment in automotive manufacturing jobs also remained stable at 169,000.

“Today’s results demonstrate how UK Automotive is delivering growth across the UK, boosting productivity and improving environmental performance. This has been driven by massive investment, in new models, plants, innovation and one of the world’s most skilled workforces,” said SMMT chief executive Mike Hawes.

“However, for UK auto manufacturing to continue to thrive, we need clarity on the future, post Brexit, to encourage ongoing investment and growth.”

The report follows fresh uncertainty about the future of the UK auto industry. As talks begin to withdraw Britain from the EU, where it trades freely with 27 other member states, auto industry figures have warned that without an interim deal, this export market, which accounts for 43 per cent of the UK’s vehicle production in 2016, could collapse.

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Brexit could cripple UK auto industry

Nissan’s manufacturing plant in the UK

Senior executives have warned that the British automotive industry could be permanently damaged if an interim deal isn’t met when Britain withdraws from the EU.

The industry, which employs over 800,000 people in the sector, is set to reach a record output in 2020 in its production of vehicles such as Jaguar Land Rover, Nissan and MINI.

“The greatest threat to that progress is Brexit,” Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT) told Reuters.

“To leave in 2019 without a deal would put the industry in peril, defaulting to WTO tariffs and customs barriers would damage our industry permanently.”

The automotive sector has repeatedly warned lawmakers that tariffs and constrained access to its biggest export market following Britain’s withdrawal from the EU could threaten the future of huge car factories in the country.

British prime minister Theresa May has proposed a clean break from the single market of the EU, which maintains free trade across all member states, in favour of a special deal.

However, any delay at the border would be hugely damaging for manufacturing operations in England. Only 44 per cent of vehicle parts in the UK come from Britain.

“Put very simply the supply chain will start to seize up with obvious impacts on our ability to manufacture vehicles efficiently,” Honda Europe senior vice president Ian Howells told Reuters. Honda manufactures eight per cent of the 1.7 million cars produced in Britain last year.

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Production begins for McLaren 720S

 

The McLaren team celebrates production

Full production of the new McLaren 720S has begun in Woking, Surrey, with the car maker celebrating the completion of the ‘Job#1’ car in its production headquarters.

The 720S is first of the second-generation Super Series, which replaces the original McLaren 12C and the 650S and 675LT.

It was the first time since the Super Series was established in 2010 that McLaren have replaced a model family with an all-new generation, said CEO Mike Flewitt at a short ceremony to open full production.

“Customer interest in the new McLaren 720S following its unveiling in March at the Geneva International Motor Show has significantly exceeded our expectations, and we are bidding farewell to the first-generation Super Series,” he added.

The 720S is the first of 15 new McLaren models to be produced by the end of 2022. Powered by a 4.0-litre V8 twin-turbocharged engine producing 536kW, the second-generation supercar achieves 0-100km/h in just 2.8 seconds with a top speed of 341 km/h.

Order books are open to the public, and customers can customise their car online, with prices starting at $374,000.

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UK car production hits 17-year high

British car production hit a 17-year high in February according to the Society of Motor Manufacturers and Traders (SMMT), with year-on-year output up eight per cent, resulting in 153,041 new vehicles being manufactured in the U.K. last month.

Year-to-date production (in February) has pushed past 300,000 for the first time since 2002, rising 7.8 per cent to 301,004 units, the SMMT said.

The increase in production was driven by a surge in international demand. The 15 per cent fall in the pound against the euro since last year’s Brexit vote has made British vehicle cheaper for buyers in the European Union.

Exports were up 13.4 per cent compared to February 2016 to 118,898 vehicles, and accounted for 76.7 per cent of all vehicles produced.

The domestic market, however, has cooled, as vehicle production for British customers fell 7.4 per cent year-on-year, a drop of 2,739 units to 34,145.

With U.K. Prime Minister Theresa May to trigger Article 50 this Wednesday and formally begin the withdraw of Britain from the E.U., car makers and industry affiliates are concerned that the resulting end of tariff-free trade across the English Channel will have a significant impact on the manufacturing industry.

“We must avoid barriers to trade, whether tariff, customs or other regulatory obstacles, at all costs,” said SMMT CEO Mike Hawes.

“To do otherwise would damage our competitiveness and threaten the continued success of UK automotive manufacturing.”

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VW fixes 470,000 cars in the UK

Volkswagen UK managing director Paul Willis has told lawmakers that 470,000 cars affected by the diesel emissions scandal have been fixed. 1.2 million cars in total were said to be affected in the UK.

“Out of 1.2 million technical measures which have to be applied, as of today, we have applied 470,000, and at the current rate we are applying these measures to 20,000 cars a week,” Willis told parliament’s transport committee.

Reuters reported that some UK lawmakers were angry that VW has not been fully held to account over the scandal. VW has not been fined in the UK, and owners have not received any compensation.

UK transport minister Chris Grayling is set to meet with German lawmakers next month and seek more information, which could lead to a British investigation into VW.

“(We) will go to Berlin next month to meet the minister … to request that we’re provided the detailed technical information that will allow us then, if we chose to, take further steps,” junior transport minister John Hayes said.

Hayes also said he will meet legal representatives of consumers taking legal action. Several British law firms have filed suits against VW, seeking compensation for UK drivers affected by the emissions scandal.

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UK dealerships sell up

A quarter of small and medium-sized dealerships in the UK will be forced to sell up in 2014, according to consulting firm Bluefin Solutions.

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