Budget brings gains but EV market made more fragile
The evening before the Autumn Budget this week, SMMT held its 108th Annual Dinner and it was one of the most successful in recent memory, joined by more than 1,000 people, the Rt Hon Peter Kyle MP, secretary of state for business and trade, and a raft of other politicians including a number of former business secretaries. It was positive to hear the secretary of state’s commitment to partnership with our industry, and to continue government’s backing of UK Automotive as a pillar of national strategic importance.
And on that front, we saw a series of announcements this week which reflect that commitment, including an additional £1.5bn to drive competitiveness and investment, deferring the end of Employee Car Ownership Schemes into the next parliament, changes to the VED expensive car supplement, and a consultation on the British Industrial Competitiveness Scheme, which could bring down the sky-high cost of energy faced by industry. All these measures will help as the sector seeks to deliver the parallel missions of economic growth and decarbonisation for the country.
What these measures will not do, however, is offset the impact of imposing a new electric-Vehicle Excise Duty (eVED) on an already fragile EV market. Indeed, manufacturers have invested to bring consumers a choice of more than 150 EV models – and subsidised their sale at unprecedented levels – to try to deliver the world’s most ambitious zero emission vehicle sales targets. The pressure of doing so, whilst maintaining industry viability, is acute and relentless. With even the OBR warning that this new tax will undermine demand, it is now essential that government works with industry to reduce the cost of compliance and protect the UK’s reputation as a location for investment.
These pressures are underlined by another difficult month for UK vehicle manufacturing, with SMMT’s latest data showing car output declined by -23.8% in October amid the impact of the country’s biggest cyber incident. Positively, almost half the cars made were battery electric, plug-in hybrid or hybrid as industry continues to decarbonise its products. And, a return to overall volume growth is on the horizon, with the latest independent production outlook expecting a total of 828,000 cars and vans to be made next year, driven by new electric car models coming into production.
As SMMT continues to champion and position the industry to deliver growth, we’re pleased to announce Paul Philpott, president and CEO of Kia UK, as the new SMMT president – succeeding Mick Flanagan, who has played a crucial role over the past two years. We look forward to working with Paul to deliver the priorities we, as an industry, share.