Why automotive is integral to reindustrialising UK regions
New prime minister Andy Burnham’s signalled intention to reindustrialise, to create jobs and deliver regional growth is the right approach – and one which the UK automotive sector is well positioned to deliver. We’re already generating £85bn in turnover, contributing £18bn annually to the economy and employing more than 188,000 directly in skilled production jobs across the UK – from the manufacturing hubs of the Midlands and the North to major plants in Southern England, Scotland, Northern Ireland and Wales and thousands of suppliers and R&D firms country-wide.
The challenge now is to create the conditions that secure the investment industry needs to compete – particularly in an increasingly competitive and protectionist global environment where countries are vying for the same opportunities. Global headquarters are making decisions now, making delivery of the UK’s Industrial Strategy, as part of the prime minister’s 10-year plan, even more urgent. The prize is substantial: more affordable energy, resilient supply chains and support for advanced manufacturing technologies, creating a pathway to restore the UK to a 1.3-million vehicle and ZEV manufacturing hub.
Investment also follows markets. Manufacturers have already invested billions in competitive EV models but weaker demand than that expected when the UK’s ZEV mandate was designed is forcing manufacturers to spend billions more in discounts. While discounts are conventionally applied to shift older vehicle stock, their use on brand new, cutting-edge tech is simply untenable. Against such challenging market conditions, securing manufacturing investment is all but impossible. As regulated targets increase further from 2027, we urgently need a review and reform, and the window to do this is closing fast.
Maintaining momentum towards a stronger UK-EU partnership is equally important – and time-sensitive. Strict rules of origin set to be introduced from January, threaten the introduction of EV tariffs worth £1.4bn next year alone – while the risk of UK exclusion from ‘Made in Europe’ proposals also looms large. Both measures would put the UK at a major disadvantage, impacting production volumes and, in turn, severely constraining EU supply chain demand, reducing choice and raising prices. We need the precise opposite to grow EV demand and manufacturing.
Britain needs a holistic approach that strengthens our global partnerships, that directs investment to our regions, and creates skilled jobs that lead decarbonisation efforts. Driving this transformation should be the Industrial Strategy, together with workable regulation and closer UK-EU cooperation. This would send an unequivocal signal across the country and internationally that the UK is open for business.