The Half-Year Automotive Update: An Overview of the UK Automotive Market

The UK automotive industry, renowned for its rich heritage in engineering and manufacturing, remains a cornerstone of the nation's diverse economy. The high-value goods produced within this sector not only create skilled jobs but also drive significant export activities. As we transition towards autonomous vehicles and cutting-edge technologies, the demand for a skilled workforce to guide these changes is paramount. The future of the automotive industry is exciting, with many advancements in technology and a concerted push towards sustainability.

The Recent Picture

In recent years, the UK's automotive industry has seen numerous advancements, from significant sustainability and environmental changes to economic booms and shifts in consumer behaviour. The recently published 25th Automotive Sustainability Report reveals that UK vehicle manufacturers have achieved a major milestone by halving CO2 emissions per vehicle produced since 1999.

Overall, UK car production rose by 16.8% in 2023, marking its best growth rate since 2010, with the total retail value of all models exceeding £50 billion. While 191,247 cars were built for domestic buyers, 77% of the output was exported, underscoring the automotive sector's contribution to the UK economy. The industry, valued at £93 billion in auto-related manufacturing, delivers £22 billion in value-added and typically invests around £4 billion annually in research and development.

The sector encompasses more than 25 manufacturers producing over 70 vehicle models, alongside specialist small-volume manufacturers, supported by approximately 2,500 supply chain businesses. Consequently, the industry's contribution to employment is significant, with over 198,000 jobs directly in manufacturing and 813,000 in total across the automotive industry. Many of these jobs are located outside London and the Southeast, with wages about 13% above the UK average. The automotive industry also supports jobs in key sectors such as steel, chemicals, plastics, rubber, advertising, finance, and logistics.

Image Source: Society of Motor Manufacturers and Traders (SMMT) Sustainability Report

Technology & Sustainability

In 2023, despite an increase in vehicle manufacturing, there was an 18% decline in CO2 emissions from factory production. The Society of Motor Manufacturers and Traders (SMMT) Sustainability Report highlights that CO2 emissions from vehicle production have more than halved (54% decline) since 1999, a significant milestone achieved through industry investment. Additionally, energy and water use per vehicle decreased by 18.0% and 17.7% respectively last year, with usage now 33% and 42% below 1999 levels.

While much of the CO2 emissions reduction in 2023 was linked to overall energy use reduction across the sector, investment in on-site renewable energy generation has also played a crucial role. For the second consecutive year, 46 GWh of renewable energy electricity was generated at automotive manufacturing and supply chain sites nationwide. The industry purchased an additional 720 GWh through green tariffs, maintaining a 23% share of overall industry energy use in 2023 despite a general trend of energy reduction.

Advancements in technology have significantly impacted sustainability within the automotive sector. There is an increasing demand from consumers for electric and hybrid vehicles, driven by government initiatives to reduce the UK's carbon emissions. Following the EU Parliament vote in 2022 to mandate that only vehicles not emitting climate-damaging greenhouse gases can be marketed from 2035, it is clear that sustainability and technology will be at the forefront of the UK's automotive industry.

Companies Powering the Change

• Bentley Motors was awarded the 'Net Zero Plastic to Nature' status for the second consecutive year in 2023
• JLR partnered with Wykes Engineering Ltd to develop one of the UK's largest energy storage systems, utilizing second-life Jaguar I-PACE batteries to harness solar and wind power.
• Stellantis launched a new maritime logistics service with Suardíaz and Peel Ports to supply parts to its Ellesmere Port manufacturing plant, reducing carbon emissions in line with its Dare Forward 2030 Strategic Plan.
• Riversimple is pioneering the next generation of zero-emission vehicles using hydrogen, emitting only water.
• Nissan announced plans for a £2 billion investment in its Sunderland plant, focusing on the manufacture of electric and self-driving cars.
• Toyota Motor Manufacturing UK, in collaboration with UK-based technical engineering partners Ricardo, ETL, D2H, and Thatcham Research, is working on transforming a Hilux into a fuel cell electric vehicle using second-generation Toyota fuel cell components.

Labour’s Victory and Its Implications for 2024

With the recent UK election resulting in a Labour victory, there is a clear focus on manufacturing within the UK, presenting both opportunities and challenges for the sector. The automotive industry is hopeful that the new government will leverage its decarbonisation success to boost the UK's economic advantage. With vehicle factory carbon emissions halved over the past 25 years, the UK is well-positioned to produce the next generation of zero-emissions vehicles.

Labour's plan for the automotive sector emphasizes embracing the Zero Emission Vehicle (ZEV) revolution, enabling the UK to tap into new markets, create jobs, and drive sustainable growth. The future of electric vehicle manufacturing is closely tied to the location of battery gigafactories. The Committee on Climate Change has indicated that if these facilities are not situated in the UK, it is unlikely that vehicle manufacturers will continue to produce EVs in the country. Labour plans to part-finance new gigafactories through both public and private investment, aiming to create 80,000 new jobs, power 2 million electric vehicles, and add £30 billion to the UK economy.

Mike Hawes, SMMT Chief Executive, stated:

"Britain’s automotive sector has been cutting carbon for decades and this new milestone is significant, not just for industry but for the nation’s move to net zero. We look forward to working with the new government to deliver its green growth agenda that puts Britain at the front of the queue for global investment and sustainability leadership. Automotive can be the driving force behind this strategy, reducing carbon emissions still further while growing the economy, improving air quality, and delivering new jobs and skills for people across the country."

The Rising Demand for Skilled Professionals

In line with the sector's growth and technological advancements, there is an increasing demand for skilled professionals. The evolution of autonomous vehicles and advanced technologies has sparked a rising need for individuals who can adapt to these changes and drive innovation. In 2023, there was a 40.8% increase in the number of apprentices and trainees within the industry, building on the 45.3% post-Covid rebound of 2022. Labour plans to replace the Apprenticeship Levy with a Growth and Skills Levy, providing businesses with the flexibility to access a broader range of training courses. This initiative aims to future-proof the next-generation workforce and ensure continued innovation in the sector.

What's to Come

The UK automotive industry is clearly excelling with technological developments related to sustainability. From the introduction of the Zero Emission Vehicle (ZEV) Mandate to future plans from the Labour government, the sector is poised for significant advancements. Companies like JLR and Bentley are leading the way in this innovative sector. With ever-evolving technologies and a talented workforce, the UK automotive industry is set to continue thriving, driving both economic growth and sustainability.