The Society of Motor Manufacturers and Traders (SMMT) has urged the government to take rapid action to secure the long-term future of one of the country’s most important assets, the automotive sector, while accelerating its decarbonisation.
The call comes as the sector finally begins to emerge from the coronavirus pandemic-induced downturn, with new analysis from the SMMT suggesting its return to growth could be worth an additional £14bn to the UK economy next year alone.
Following five years of Brexit uncertainty, two years of lockdowns, and crippling global supply chain shortages, the sector’s recovery is expected to gain momentum in 2023, the SMMT said.
Industry outlook highlights strategic importance of Automotive to Britain’s economic recovery, with growth worth £14bn targeted in 2023https://t.co/lTGlUAWJoH pic.twitter.com/p9FzjNc9Fk
— SMMT (@SMMT) December 14, 2022
The new car and van market is anticipated to grow by 15% next year, worth £10bn, with further potential in 2024, delivering a cumulative £25bn win for the economy.
The manufacturing outlook is equally promising with easing semiconductor shortages expected to help factory output rise by 15% in the next 12 months to 984,000 units, an uplift worth some £3.9bn.
To harness this growth, the sector is calling for a targeted government action plan to safeguard the future of advanced automotive manufacturing and the thousands of British jobs it sustains.
But as the sector undertakes its biggest transformation in 120 years – upon which the UK’s net zero ambitions depend – it faces multiple threats.
Economic instability, trade protectionism, regulatory change, a cost of living crisis, skills shortages and soaring energy costs already some 80% higher than the EU average, are all acting as a brake on its global competitiveness, the SMMT suggested.
A dedicated action plan with a package of measures to amplify automotive’s competitiveness would help to overcome these challenges, the SMMT said.
These measures should include extended support on energy costs, help for cash-flow constrained SMEs, business rate reform to encourage rather than penalise investment, Apprenticeship Levy reform, the creation of a national skills platform, and investment to drive faster rollout of charging infrastructure.
In a statement, Mike Hawes, SMMT chief executive, said: “In the most testing of times, growth finally beckons for the UK automotive industry, and as recession looms, that’s growth that should be nurtured."
“We need a framework that enhances competitiveness, enables investment and promotes UK Automotive’s strengths: innovation, productivity and a highly skilled workforce," he concluded.