UK car manufacturing grew by almost 40% in September

In the greatest September since 2020, UK automobile manufacturing soared by 39.8% with 88,230 vehicles departing British assembly lines – 25,105 more than the same month last year, according to fresh numbers provided by the Society of Motor Manufacturers and Traders (SMMT).

It was actually the best month for growth thus far this year, with 659,901 cars coming off UK assembly lines so far this year, or 14.9% more than during the same period in 2022.

Both domestic and export markets saw increases in output: foreign shipments climbed by 32.2% to 64,727 units, while production in the UK increased by 65.9% to 23,503 units.

Major markets saw notable growth: the US had a 19.8% increase to 6,591 units, China saw a 28.2% increase to 4,776 units, and Turkey saw a 212% increase to 4,162 units.

Despite this, the EU remains by far Britain’s top trading partner, with 37,563 automobiles made in the UK being sent to the bloc in September, up 46.1% from the previous year and accounting for 58.0% of the sector’s foreign trade.

Since January, the number of British cars shipped to international markets has increased by 16.3% to 524,973 units. Electrified cars now make up more than a third (37.5%) of outgoing shipments, up from 26.4% in the previous year.

The UK-EU Trade Cooperation Agreement (TCA) tariff-free trade must be preserved, according to the SMMT, given the growing significance of electric vehicle (EV) trade, particularly with mainland Europe, where bilateral trade has more than doubled in value over the previous three years.

However, more stringent battery origin regulations will take effect in January 2024, which may result in fleets having to pay more for EVs starting the following year.

The rule changes jeopardise the competitiveness of UK exports to the EU and EU imports into the UK market, given the importance of batteries to the overall cost of an EV.

According to the SMMT, noncompliance will incur a 10% tariff, which, if fully implemented, would increase the average price of battery electric vehicles (BEVs) constructed in the UK by £3,600 in Europe and the average price of BEVs created in the EU and sold in the UK by £3,400.

However, it states that a three-year delay in the introduction of these new standards is easily doable via the current TCA framework without the need for formal renegotiation, maintaining competitiveness and benefiting British and European firms.

“A particularly strong period of car making is good news for the UK, given the thousands of jobs and billions of pounds of investment that depend on the sector,” stated Mike Hawes, chief executive of the SMMT.

“Britain is well-positioned to be a worldwide hub for electric vehicle manufacture if the investment and economic conditions are favourable, as nations all over the world are moving towards zero-emission transportation.

The first and most important step is for the UK and EU to agree to postpone the impending stricter rules of origin requirements, considering the growing significance of the production of electric cars.

“This would allow the automotive industries on both sides of the Channel the breathing room they need to expand their gigafactories and green supply chains—two things that are critical to a stable, long-term transition.”

Open Roads: Driving Britain’s Global Automotive Trade, the most recent report from the SMMT, was released last week. It contains a number of recommendations that would guarantee long-term growth in the automotive industry, with progressive trade agreements, a welcoming investment climate, and a thriving domestic supply chain all being essential to a smooth transition.