Isolated policies paper over cracks for UK automotive sector, says RSM UK

30 November 2023

Rachel Milloy, senior analyst in manufacturing at RSM UK, comments:UK car production in October 2023 rose by 31.6% (91,521 units), with the rise in production driven by a 58.5% uplift in exports, while electric vehicle (EV) production also rose by 52.1%.

‘The uptick in EVs will continue to bolster UK car production, especially following Nissan’s announcement last week which confirmed a £2bn investment to produce two new electric models. This investment, which includes significant government backing, will also fund the building of a gigafactory, supporting the UK’s supply chain and thousands of jobs at Nissan’s North East site. 

‘The automotive industry also got a boost in last week’s Autumn Statement with the launch of the Advanced Manufacturing Plan (AMP) earmarking further investment, plus positive changes to investment incentives including making full expensing permanent. Both policies provide clarity for long-term investment, and are further supported by regional investment zone announcements, giving the industry much-needed backing and confidence to commit to capital investment, innovation, automation and battery production.’

She added: ‘There are however still a number of challenges to overcome, namely requirements for the rules of origin, as the EU is still the main market for UK-made vehicles. However, the European Commission’s ‘Plan B’ proposals may mitigate the impact. Labour shortfalls and rising employment costs also remain, and the industry is lobbying to improve gender diversity across all roles and levels. Furthermore, the lagging impact of interest rate rises is likely to hit many more households next year as fixed mortgages come up for renewal, which will hit demand on new vehicles as motorists cutback. 

‘The Autumn Statement did deliver positivity for the automotive industry through isolated policies but the UK government still lacks an overarching, long-term industrial strategy which is needed to unlock growth, innovation, talent retention, and greater certainty for investment to allow manufacturers to compete globally within the EV revolution.’