After years of stalling, the United Kingdom's car industry is back on the fast track. Sales are rocketing and exports booming as demand for "made in Britain" vehicles accelerates.
British car industry geared for fast lane after years of slow sales
Britain’s motor industry is speeding ahead, with more than 1 million cars made in the United Kingdom so far this year.
By the end of the year, 1.5 million cars are set to have rolled off the production line and maybe as many as 2.2 million – driving the industry to a five-year high.
Furthermore, Britain has raced past France to become the second biggest country for car sales in Europe, after Germany.
Private demand for cars, up 16.7 per cent so far this year, has spurred the boom in sales, pushing overall sales for the first nine months of the year up 10.8 per cent over the same period last year.
The UK Society of Motor Manufacturers and Traders (SMMT), which represents the industry, has forecast sales of more than 2.2 million this year, 8 per cent higher than last year. Last month’s rise was the 19th straight month of increased sales.
Britain is the only big car producer in the EU to show positive growth this year, in another boost for the country’s £59 billion (Dh348.98bn) car industry.
“[The UK] is a market that many have viewed as defying gravity over the past 12 months, and suggested cannot continue to do so indefinitely,” says David Raistrick, the UK automotive leader at Deloitte.
“It may however be that the UK has found a new level for sustainable new car sales on a longer term basis.”
The latest SMMT production figures for September show that production rose by 10 per cent on last year’s figures and that every fourth car made in Britain last month was sold in the home market. That reflects the continuing popularity with British buyers of the two models of which British car workers are producing the most: the Nissan Qashqai and the BMW-owned Mini.
Written off as a byword for failure a decade ago, the car industry in the UK was seen as uncompetitive and inefficient. The woes of MG Rover, the last domestically-owned mass-car manufacturer in the UK, typified the industry. BMW sold it to a management buy-in team in 2000 but by 2005 it was in administration and was then sold to the Chinese Nanjing Automobile Group.
Yet now Nissan, Honda, Toyota, Jaguar, Land Rover, Mini, Rolls-Royce, Bentley, Aston Martin, Lotus and Morgan all make cars in the UK, successfully, and many more major marques produce engines or commercial vehicles here.
All of the mass-production marques are foreign-owned – a prospect that caused much hand-wringing in decades gone by. However, that has not stopped investment in the industry reaching record levels.
In particular a focus on cars at the quality end of the spectrum, aimed at fast-growing overseas markets, has helped to turn the industry’s fortunes around.
In August, Jaguar Land Rover said it would expand its Halewood factory in the North West in a move that will create up to 1,000 new jobs.
Halewood makes the hugely popular new Range Rover Evoque or “baby Range Rover”.
Jaguar Land Rover, based in the English midlands, is the UK’s biggest exporter and sends an increasing large stream of Range Rovers and Land Rovers here and to the wider Arabian Gulf.
Jaguar sales in the Middle East region last year rose 27 per cent on 2011, while sales of Land Rover were up by 34 per cent, according to the arabia.msn.com website. Jaguar Land Rover (JLR) global retail sales was up 30 per cent last year on 2011, the best global sales performance in the company’s history.
The company generates export revenues of £11bn a year, on sales of nearly £16bn.
The luxury car marque Bentley logged a 44 per cent increase in Middle East sales last year on 2011 as against a 22 per cent increase in its global sales. Last year’s new Bentley Continental GT V8 accounted for as much as 20 per cent of it sales. Globally, the car maker delivered 8,510 cars, inclusive of 815 cars delivered in the Middle East.
Back in the UK, Nissan – whose European hub is in Britain – has put its Sunderland plant in the north-east of England on 24-hour production for the first time.
“This year alone, more than £2.6 billion has been committed across the UK automotive sector, from the supply chain to global car manufacturing brands,’ says Mike Hawes, the chief executive of the SMMT.
“This long-term financial commitment and robust demand for UK-built products demonstrate the global appetite for high-quality, desirable products borne of the UK’s world-class design, R&D and engineering.”
Most of the cars made in the UK are intended for the export market, especially China. According to Telegraph in January, China overtook the UK to become JLR’s largest market for the first time last year, driving record sales at the luxury British car maker.
JLR, owned by India’s Tata, exports more than 80 per cent of all the vehicles it makes and has been held up as a poster child of British automotive success by ministers.
A 30 per cent rise in global sales to 357,773 vehicles last year underpinned a decision to create 800 new jobs at its Solihull plant, to support the production of new models this year.
Sales in China grew by 71 per cent last year to 71,940, with sales up 19 per cent in the UK at 68,333, and 11 per cent at 55,675 in the US.
But the reason the UK industry is so cheerful is that it is doing so much better than its rivals in Europe. While car sales in the UK have been rising steadily for the past 19 months, across the Channel they are at a 17-year low.
John Leech, the head of automotive at KPMG, expects production to accelerate on the mainland Continent after the summer car-plant shutdowns because European markets do finally seem about to recover.
In recent years, as many as five in six British-built cars have been bound for export but huge plunges in sales on the Continent – more than 20 per cent in Italy and Spain, well into double digits in France and nearly 10 per cent in Germany – has dented demand.
“The car output trend is upward, yet even better news is expected in the second half of 2013 as the decline in European car sales looks finally to have bottomed out,” Mr Leech says.
“Registrations of new cars in Europe rose 4.8 per cent in July and even austerity-hit Spain, Portugal and Greece, where sales are at about half pre-recession levels, showed double-digit gains. With the euro zone back out of recession, consumer confidence is starting to improve, giving UK car manufacturers confidence that the second half of 2013 will see greater production volumes than the first.”
If Mr Leech’s predictions are borne out, it will help UK car production achieve its fourth consecutive year of growth – in sharp contrast to the rest of Europe, which has been declining for the past five years.
One pothole in the road, however, is that UK production of vans, lorries, buses and coaches is down sharply – 13 per cent this year – following the closure of a Ford factory in Southampton at the end of July.
Now it remains for the UK to persuade the motor industry supply chain that it, too, needs to move more of its work to Britain. Only 30 per cent of the parts in the cars made in Britain are produced here, compared with 60 per cent in Germany.
In an effort to capitalise on the “made in Britain” car boom, the government has appointed an automotive ambassador, who is on a global mission to persuade parts suppliers back to these shores – with the potential to create 15,000 jobs.
From a car industry that was until recently perpetually stalling, the UK now has its sights set on pole position in Europe.