Collaboration with global partners crucial to UK’s industrial competitiveness
Stabilised car production – down just -0.8% in March – offered some encouraging news this week amid an otherwise challenging landscape. The performance, achieved despite part supply disruption at a major plant, weak exports to Asian and US markets and model changeovers, reflects the industry’s underlying resilience.
The UK’s manufacturing competitiveness, however, remains under intense pressure. Securing and growing our capability, while attracting the next wave of investment, means getting the fundamentals right. The British Industry Competitiveness Scheme (BICS) announced earlier this month is undoubtedly a big win – promising to cut automotive industrial electricity costs, which are among the world’s highest, and go some way to levelling up the international playing field. But these benefits must be realised quickly. The geopolitical climate is tough: ongoing conflict in the Middle East means volatile energy prices, while rising oil costs undermine demand in key markets.
On top of these challenges, the EU’s proposed Industrial Accelerator Act (IAA) and ‘Made in Europe’ policy, as drafted, would severely disadvantage UK automotive products in substantial segments of the European market. That would undermine the competitive position of UK plants in their largest export market, with significant consequences for the EU sector given the UK automotive sector buys more components from the EU than any other country. That’s trade worth an annual £6.9 billion to the EU, on top of the £34.6bn of vehicles it sells into the UK.
Amending the IAA to include the UK as a trusted partner should therefore be an urgent priority for every EU government with an automotive stake. Pragmatism is key, and it must prevail on the other looming issue: rules of origin, which, under the Trade Cooperation Agreement, are set to become even tougher in less than a year. Tariffs serve no one – not least consumers who face higher prices and less choice. These are issues that frustrate the industry – and frustrate Ministers – when we should be focused on the growth our sectors desperately need.
In this era of fierce global competition and rapidly changing technology, standing still is not an option. That dynamism was on full display this week at Auto China 2026 in Beijing, now the world’s largest motor show where the pace of change and ambition was evident. For SMMT, the event – alongside meetings with manufacturers, government officials and UK representatives – was a timely occasion to reinforce the opportunities offered by closer partnership. As the world’s largest vehicle producer and vehicle market, China has huge strengths while the UK has much to offer in terms of innovation, design and industrial excellence. We need to create opportunities that are mutually beneficial, looking outward not inward.