SMMT Update – Market and manufacturing head in right direction
Preliminary new car market data published today indicates the UK’s best ‘new plate September’ performance since 2017 with registrations up over 12%. While consumer confidence has improved recently, and GDP growth has been more resilient than expected, the overall growth is largely being driven by intense competition – significantly from new entrants – increased choice and attractive deals which are encouraging many into the new car market who might otherwise have bought used.
September’s stronger overall market also helped deliver the country’s highest ever monthly BEV volume. These are milestones to celebrate but, inevitably, comparisons with the Zero Emission Vehicle Mandate target frame the narrative negatively. While year-to-date BEV market share stands at an impressive 26.2%, it is considerably adrift of this year’s target of 33%. The extent of that gap matters because, despite billions of pounds of investment in electric model rollout, manufacturer discounts and government incentives, not to mention high fuel prices, most people are still choosing petrol or diesel fuelled models.
Flexibilities are helping bridge the demand gap to compliance, but they reduce in impact over time and, most critically, do not remove the cost. And that cost is a barrier to investment and competitiveness. With the UK’s regulatory trajectory ahead of every major market in the world, government’s review of the mandate is the right thing to do, given industry needs not just certainty but investment viability.
Investment confidence can quickly be eroded. Recent announcements by Bentley, McLaren and Nissan are a real fillip. But competitiveness is fragile and the UK is hindered by eye watering energy costs, additional labour costs and trading volatility. This is why government must not slow down but double down on measures to improve the UK’s market regulation, address industrial energy costs and stabilise trading relationships. SMMT was pleased, therefore, to champion UK Automotive’s priorities at this week’s Labour Party conference in Liverpool, including a reception hosting members and parliamentarians including roads minister Justin Madders MP, reindustrialisation minister Blair McDougall MP, transport select committee chair Ruth Cadbury MP and a number of MPs representing constituencies with deep automotive roots.
One of the headlines from the Conference was the prime minister putting the UK’s relationship with Europe – and the possibility of re-joining – back on the agenda, albeit a long-term agenda. UK automotive trade with the EU is a top priority and the bloc’s current ‘Made in Europe’ proposals and strict EV battery rules of origin requirements pose a clear and present danger to manufacturers, their investments, supply chains and market opportunities – on both sides of the Channel.
Analysis commissioned by SMMT shows UK automotive manufacturing directly supports €24bn of EU economic activity and 250,000 jobs across the bloc, such is the extent of our interdependence. Any damage to the UK sector as a result of ‘Made in Europe’ market exclusion will also damage the European automotive industry. At a time of intense global competition, barriers between our highly integrated and strategically aligned industries should be reduced, not raised, so we will continue to urge government to ensure automotive is a top priority at the UK-EU summit later this year.