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Difficulties being faced by the vehicle and vehicle parts manufacturing sector

Much like all industries, the vehicle manufacturing sector isn’t immune to external forces which means it’s often faced with challenges. From changing legislation within the industry, to wider political and environmental pressures, we look at some of the difficulties being faced by the vehicle and vehicle parts manufacturing sector.

Brexit

Brexit uncertainty has continued to cause turmoil throughout the automotive industry, with car plants managing summer shutdowns early, investment cuts and job losses.

There are a number of problems that Brexit could bring for the industry in the longer term. Stricter customs controls at the border may lead to delays in the supply of vehicle parts and therefore longer wait times. With multiple countries often being part of the supply chain of the manufacturing process, any kind of disruption can be magnified. Tariffs on finished vehicles could also change, a reported 10% on imports and exports from the EU.

The Society of Motor Manufacturers and Traders (SMMT) states that at least 10% of those employed in the UK automotive manufacturing sector are from elsewhere in the EU. If those workers have to find work elsewhere, outside of the UK, it would be a big blow to the industry.

Additionally, figures from SMMT show that investment into the UK sector has been falling since the referendum took place.

Mike Hawes, SMMT Chief Executive commented this year, saying:

“…it is utterly unacceptable that, more than two years since negotiations started, industry still does not know what the UK’s relationship with the EU will be in the coming weeks and months. Uncertainty has already caused serious damage – car plants are on enforced shutdown, investment has been cut and jobs lost. This cannot go on. Government and Parliament must use this extension purposefully to take ‘no deal’ off the table for good, and guarantee a positive long-term resolution that delivers frictionless trade. If they fail, we face yet another devastating ‘no deal’ precipice on 31st October.”

Falling diesel car sales

Diesel car sales fell by 37% this March compared with March 2017, according to the latest figures from the industry body the Society of Motor Manufacturers and Traders (SMMT). According to the SMMT, 153,594 new diesel cars were registered in March 2018, down from 244,593 a year before.

Key factors involved in this downturn are environmental pressures and confusion for consumers, pending restrictions on diesel cars and revised taxes on diesel vehicles, which is a complete 360 from the tax breaks introduced on diesel cars when Gordon Brown was chancellor.  

Focus on electric

In the UK, sales of new diesel cars will be banned by 2040 and by 2050, all the cars on the road will have zero emissions. The ban will mean that by 2040, only electric cars will be available to buy new. This will cause huge changes to the car manufacturing industry as well as the vehicle infrastructure required to support it.

Jaguar Land Rover recently announced plans to produce electric cars in the UK. But as reported in the Financial Times, Britain overall is struggling to keep up with its rivals in the global electric car race.

As we mentioned before, new investment is declining and despite the UK once being a hub for investment, as the focus shifts towards electric cars, the UK’s status seems to be in jeopardy. For example, Honda announced it was closing its car assembly plant in Swindon, choosing instead to make electric cars in Japan.

Experts think that investment and output will bounce back once the details of Brexit have been ironed out but then, Britain will have to contend with other nations racing to attract battery investment.

Flexiwall
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