- UK vehicle production up 17 per cent to 1.02mn in 2023
- 2024 figure forecast to edge up to 1.04mn
The UK car industry is “back in the game”, a trade body has said, after manufacturers pledged to invest £23.7bn last year. However, the head of the Society of Motor Manufacturers and Traders (SMMT) warned they were still playing catch with rival nations after spending years out in the cold.
Mike Hawes, head of the body, said the country had been “nigh-on uninvestable” as the Brexit referendum and subsequent trade wranglings were followed by political and economic instability. However, commitments to new car plants and battery factories by the likes of Tata Motors (IN:500570), BMW (DE:BMW) and Nissan (JP:7201) meant pressure had been “relieved”.
“And not before time," he added. "We are still playing catch-up with the rest of Europe [and] globally who have secured a lot of those Gigafactory investments."
The UK produced just over 1.02mn vehicles last year, a 17 per cent year-on-year increase and the industry’s best year since 2019. Only 191,247 of these were for domestic buyers, though, with the remainder shipped out as exports. More than 60 per cent of these went to the European Union.
The number of battery electric and hybrid vehicles produced increased by 48 per cent to 346,4551, which represented around 38 per cent of total output, SMMT figures showed. The forecast for this year is for production to edge up to 1.05mn, although there will be fewer cars and more vans in the mix due to model changes within individual plants.
Historic lows
Production figures remain well below pre-pandemic levels when they averaged 1.5mn-1.6mn per year. Honda’s Swindon plant closure in 2021 and Stellantis’ (IT:STLAM) decision to stop producing cars in Ellesmere Port in 2023 (it still produces vans) has affected this. However, Hawes explained that the new car market was not "where it was four or five years ago" in both Europe and further afield.
Attracting new investors would probably mean courting investment from Chinese manufacturers, who have so far favoured low-cost sites on the continent such as BYD’s (HK:1211) proposed new plant in Hungary.
The UK has some advantages in terms of existing skills, innovation and lots of renewable energy but faces challenges including higher energy costs and a lack of available grid connections, Hawes said.
The SMMT has also called for a halving of VAT rates on electric vehicles for up to three years to encourage sales. Higher ticket prices currently mean EV buyers pay a higher absolute level of VAT on car purchases and reducing this would put an additional 250,000 EVs on the road.
