2011 A STEP-CHANGE YEAR FOR UK AUTOMOTIVE







Published by Gerald Ferreira Date: December 20, 2011
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Automotive industry experts at the Society of Motor Manufacturers and Traders (SMMT) have named 2011 a step-change year for the industry. Based on unprecedented levels of international investment in the UK and long-term commitments to building new and existing vehicles and engines across the country, the prospects for automotive manufacturing are strong.

Through 2011 vehicle manufacturers have committed in excess of £4 billion to projects in the UK, from the development of low carbon technologies to the introduction of all-new models. This high level of investment comes with the added bonus of increased and safeguarded employment for thousands of UK workers, plus millions of pounds of business for UK-based suppliers.

“2011 has been a very significant year for the UK motor industry. We have seen a remarkable series of investment announcements by global vehicle manufacturers with a total of £4 billion of investment promised for the UK, securing new model programmes, production facilities and jobs. Despite the uncertainty within the Eurozone, these decisions demonstrate real confidence in the future of UK manufacturing and its role within a rebalanced economy,” said Paul Everitt, SMMT Chief Executive.

UK automotive manufacturing could hit all-time high

This year, UK automotive manufacturing reported positive results with total vehicle and engine production set to end the year over 5% up on 2010. In the short term, economic stability in the Eurozone and global export markets is essential to enable consistent growth. Looking ahead five to 10 years, UK automotive manufacturing could be on course for near-record highs – new models, long-term commitments, ongoing investment and government recognition of the importance of manufacturing to the UK economy, combine to stand the UK in good stead for the future.

R&D holds key to UK’s automotive future

Automotive is Europe’s largest investor in R&D, making global competition for R&D budgets fierce. The Chancellor used the Autumn Statement to respond to industry’s calls for a reform of the UK R&D tax credit system, announcing a move to an ‘above the line’ credit from 2013. Sending a strong signal to international investors, the move could see an additional £390m of R&D investment in the UK each year and increased economic output of £665 million in the short-term, safeguarding jobs and affirming the country’s status as a prime location to base high-skill operations.

World-class skills and young people are key to ongoing success

The UK is a world leader in automotive engineering skills, attracting big R&D budgets, testing programmes and technology development projects. Maintaining and developing these skills are crucial to the ongoing success of UK automotive.

In addition to introducing thousands of new apprentice positions, UK automotive took the lead in government’s ‘See Inside Manufacturing’ initiative. The programme saw automotive manufacturers across the country offer a series of activities to inspire the next generation of budding engineers, encouraging the uptake of Science, Technology, Engineering and Mathematics (STEM) subjects.

  • 2011 automotive investment announcements:
  • 2 February 2011 – McLaren Automotive – First McLaren MP4-12C high-performance sports car entered into production at the McLaren Technology Centre in Woking.
  • 2 March 2011 – Jaguar Land Rover – Supply contracts in excess of £2 billion for the new Range Rover Evoque awarded to over 40 UK-based companies.
  • 24 March 2011 – Opel/Vauxhall – Confirmed Luton as the manufacturing site for the next generation Opel/Vauxhall Vivaro light commercial vehicle, which will enter into production in 2013.
  • 28 March 2011 – Tata Motors – Announced engineering and technology expansion plans at Tata Motors’ European Technical Centre (TMETC) in Warwickshire. Facilities at the centre are expected to increase by 40% by 2013.
  • 11 April 2011 – Aston Martin – Announced new city car, the Cygnet, will be produced at its Gaydon facility in Warwickshire, creating approximately 150 new jobs and more within the UK’s supply chain. The Cygnet is the 11th major new production car that Aston Martin has bought to the UK facility since it was founded in 2004.
  • 13 April 2011 – MG – Announced new MG6 GT sports fastback will be designed, engineered and finally assembled at its UK-based production facility in Longbridge, Birmingham; 400 jobs safeguarded. Further announcement expected that a second model, the MG6 Magnette four-door sports saloon will also be designed, engineered and finally assembled in the UK.
  • 5 May 2011 – Optare – Unveiled its new manufacturing facility in Elmet, Yorkshire with the capability to manufacture approximately 1,200 buses annually and 400 jobs safeguarded. The facility will be the first new bus assembly plant to open in the UK in almost 40 years.
  • 6 May 2011 – Jaguar Land Rover – Announced 250 C-X75 all-hybrid supercars will be designed, engineered and built in the UK, creating over 100 highly-skilled jobs.
  • 6 June 2011 – Aston Martin – Four-door Rapide sports car will commence production at its facility in Gaydon, Warwickshire, from the second half of 2012.
  • 7 June 2011 – Toyota – Installed the world’s first large-scale solar panel array for mass vehicle production at its Derbyshire plant. The panels will generate sufficient electricity to manufacture 7,000 cars and save 2,000 tonnes of CO2 annually. The panels will be used in the manufacture of the Auris hybrid, Auris and Avensis models at the UK plant.
  • 8 June 2011 – Nissan – £192 million investment to design, engineer and build the new Qashqai in the UK; 6,000 jobs safeguarded and 43% UK sourced parts. Additionally, £420 million confirmed investment in Sunderland plant for the production of the Nissan LEAF from 2013 and for a new stand-alone facility to produce lithium-ion batteries for Renault and Nissan vehicles from 2012.
  • 9 June 2011 – BMW – £500 million investment in new facilities and equipment at the Oxfordshire assembly plant, the engine plant in Hams Hall, Birmingham, and the pressings plant in Swindon. 5,000 jobs safeguarded with announcements that MINI Coupé from 2011 and MINI Roadster from 2012 will both be built in the UK.
  • 27 June 2011 – UK Low Carbon Innovation Fund (LCIF) based at the University of East Anglia (UEA) invested £400,000 in new automotive technologies designed to improve fuel efficiency and reduce carbon emissions.
  • 4 July 2011 – Jaguar Land Rover – The first Range Rover Evoque is driven off the production line at Land Rover's Halewood manufacturing facility in Liverpool. More than 3,000 new jobs created to manufacture the new model.
  • 17 August 2011 – The Schaeffler Group – Several million euros invested into its engine components manufacturing plant in Llanelli, South Wales; 230 jobs safeguarded.
  • 19 August 2011 – MIRA – Awarded ‘Enterprise Zone Status’ at its West Midlands development facility, securing global R&D operations from its UK base for the next ten years.
  • 31 August 2011 – MINI announced production of its two millionth MINI at its Oxford plant.
  • 5 September 2011 – Jaguar Land Rover – Announced 336 new graduate recruits will join its training programme to develop technical and engineering expertise for careers in UK automotive.
  • 9 September 2011 – Nissan announces 25 years of manufacturing at its UK Sunderland plant. Production of the new Qashqai will take Nissan’s total investment in its UK manufacturing base to £3.3 billion.
  • 19 September 2011 – Jaguar Land Rover – £355 million investment in new facility in Midlands to manufacture low emission engines; 750 jobs created.
  • 20 September 2011 – CPP Global Holdings – Announced production of the new Jensen, to be designed, developed and built in Coventry.
  • 20 October 2011 – Ford – Announced 80 years of production at Ford Dagenham and marked the production of approximately 11 million vehicles and more than 38 million engines at its largest UK facility.
  • 10 November 2011 – Jaguar Land Rover – Announced it will recruit 1,000 production staff at its advanced manufacturing plant in Solihull.
  • 16 November 2011 – MIRA – £300 million investment in facilities expansion and upgrade, 2,000 jobs created.
  • 24 November 2011 – Toyota – Announced £100 million investment in its Burnaston manufacturing facility in Derbyshire to produce the new generation hatchback; 1,500 new jobs created and £85 million invested into the UK supply chain.
  • 7 December 2011 – Caterpillar’s Building Construction Products Division – Announced £50 million investment in its assembly plant in Leicestershire and fabrications plant in Stoke-on-Tees. In addition, 300 new jobs created in the East Midlands and North East.
  • 7 December 2011 – JCB – Announced £31 million investment in a new engine development project (£4.5 million funded by the RGF) in the Midlands and Wales; 350 new jobs created.
  • 12 December 2011 – Rolls-Royce Motor Cars – Announced significant investment in its Assembly Hall and Surface Finish Centre, with expansion plans set to commence in 2012.
  • 19 December 2011 – Honda – Announced start of mass production of the New Civic and plans to create 500 new jobs at its Swindon plant to meet increased production forecasts in 2012.

UK automotive industry statistics:

Economy

  • UK automotive represents around 3% of total GDP.
  • Automotive manufacturing turnover accounts for two thirds of the UK’s total for the sector.
  • Typical UK automotive turnover is around £50bn.
  • Typical net value-added to the economy in excess of £8.5bn.
  • The industry employs over 700,000 people.
  • Automotive accounts for over 10% of total UK exports.
  • The UK industry invests more than £1 billion each year in R&D.

Manufacturing

  • The UK is home to:
  • Seven volume car manufacturers.
  • Six commercial vehicle manufacturers.
  • 11 bus and coach manufacturers.
  • More than 10 niche and specialist vehicle manufacturers.
  • Eight Formula One teams.
  • Strong premium brands – second only to Germany in global market share.
  • Over one million vehicles and two million engines are produced in the UK each year.
  • Automotive manufacturing levels are set grow to pre-recession levels by 2014.
  • More than 75% of vehicles manufactured in the UK are exported.

Supply chain

  • At present, about 80% of all component types required for vehicle assembly operations can be procured from UK suppliers.
  • The UK automotive supply chain typically generates £4.5-£5bn of added value annually.
  • Around 2,350 UK companies regard themselves as ‘automotive’ suppliers, employing around 82,000 people (42% tier one, 19% tier two, 34% tier one and two).
  • It is estimated that every job in UK vehicle assembly supports 7.5 elsewhere in the economy.
  • Of all UK suppliers, over 70% manufacture their products in the UK.

Business environment

  • There is an industry-wide desire to source more components locally, particularly components in high technology, low carbon and electric vehicle areas.
  • Government is investing £50 million over the next three years to support UK manufacturers, improve productivity and international competitiveness.
  • The UK is internationally recognised for its ability to use workforce flexibility to manage efficiently fluctuation in production levels.
  • The Automotive Council is a collaborative industry and government body that is working strategically to shape the future of UK automotive.

Eco credentials

  • Since 2000, CO2 emissions of new cars registered in the UK have fallen by over 23%.
  • The next 20 years will see over £150bn invested in low and ultra-low carbon vehicle technologies.
  • Emissions from the entire UK car parc have fallen by 7.8% since 2000.
  • The UK government has committed over £450 million towards placing the UK at the global forefront of the development, demonstration, manufacture and use of ultra-low carbon vehicles.

Latest market information

UK new car registration figures:

Year-to-date Total Diesel Petrol AFV Private Fleet Business
2011 1,822,065 920,983 877,481 23,601 777,792 951,278 92,995
2010 1,907,029 873,899 1,011,657 21,473 905,922 909,230 91,877
% change -4.5% 5.4% -13.3% 9.9% -14.1% 4.6% 1.2%
Mkt share '11 50.5% 48.2% 1.3% 42.7% 52.2% 5.1%
Mkt share '10 45.8% 53.0% 1.1% 47.5% 47.7% 4.8%

SMMT forecasts for 2011 and 2012

SMMT forecasts for 2011 and 2012

2011 New car registrations: 1.92 million units, down 5.3% on 2010. Diesel penetration: 50.4%, up from 46.1% in 2010. New LCV registrations: 260,200 units, up 16.7% on 2010.

2012 New car registrations: 1.96 million units, up 2.1% on the 2011 forecast. Diesel penetration: 50.5%, 0.1% up on the forecast for 2011. New LCV registrations: 257,100 units, down 1.2% on the 2011 forecast.