Full Throttle: SMMT launches strategy for UK automotive industry

The Society of Motor Manufacturers and Traders (SMMT) has launched a new plan to secure the future of Britain’s automotive manufacturing sector. The ‘Full Throttle: Driving UK Automotive Competitiveness’ strategy, commissioned by SMMT and written by Public First, sets out a “series of bold policy proposals” for this coming year and remainder of the decade, covering “all aspects essential to automotive industry competitiveness.”

Introducing the plan, SMMT notes that the automotive manufacturing sector employs around 180,000 people nationwide, contributes £15 billion to the economy and is the country’s largest exporter of goods. Three-quarters of people over 17 in England hold a driving licence, and (according to a Public First/Findoutnow survey) 95 per cent of car owners agree that their car gives them significantly greater freedom and mobility. “It is an industry that warrants unambiguous backing,” states SMMT.

Funding for industry transformation

The strategy calls for a new ‘Build Back Better Fund’ to support industry transformation, not just in automotive but across other manufacturing sectors, to revolutionise production lines and overcome some of the areas where the UK lags in cost competitiveness or strategic support – from skills to energy costs. Most importantly, SMMT says the fund will help the sector transition to Net Zero and transform our existing manufacturing and supply-chain.

SMMT considers the shift to electrified vehicles the biggest challenge facing the sector. Government is already working with industry to attract additional battery manufacturing to the UK, but the report calls for a binding target of 60 GWh of battery capacity be built by 2030. These ‘gigafactories’ would give British manufacturers the capability to produce up to one million electric vehicles a year and ensure tariff free access to critical markets in the EU.

Finally, to support market transition, the report calls for the installation of at least 2.3 million charging points nationwide before the end of the decade. This would ensure all drivers – especially those without driveways – have the confidence to invest in the latest zero emission technologies, investment that SMMT says will not just support a healthy domestic vehicle market, but which will underpin mass market automotive manufacturing in the UK and help deliver the country’s climate change and air quality goals.

High stakes

“The stakes are high,” opines SMMT, elaborating that in a best-case scenario with the sector transitioning successfully to a zero emissions future, with ambitious global trading terms, the potential exists to gain 40,000 new, well paid and highly skilled sector jobs by 2030. Public First modelling suggests this would provide a significant impact in auto heartlands such as the North-East and West Midlands, directly helping ‘level up’ the UK.

“Without the competitive conditions, however, the UK’s automotive industry risks decline. In a worst-case situation, with the sector left stranded, analysis shows that around 90,000 jobs could be lost compared with the central scenario, with most of these outside London and the South-East, increasing UK regional inequality,” warns SMMT, again drawing upon data gained through Public First modelling.

Critical period for the sector

Speaking yesterday at the automotive industry’s annual Summit, Mike Hawes, SMMT chief executive, said: “The next few years represent a critical period for the sector. The pace of technological change is accelerating and the competition more ferocious. If we are to secure vehicle manufacturing in this country, with all the benefits to society that it brings, decisions need to be made today.

“The automotive sector is uniquely placed to help this government deliver on its agenda; to level up, deliver net zero and trade globally. The Government has made clear its support for the sector in its negotiations with Europe, so now is the time to go full throttle and take bold action to support one of Britain’s most important industries.”

‘Full Throttle: Driving UK Automotive Competitiveness’ outlines 12 policy proposals. SMMT believes that if acted on together, they will “set the UK sector on course for growth, boosting innovation, productivity and enterprise with benefits for all society.” If not, SMMT sees a risk of the industry “falling behind,” with “production declining, jobs lost and economic damage not only in automotive, but in the many other sectors the industry helps support, from chemicals and steel to finance and advertising.”

The 12 Policy Proposals:

Technology & Innovation

• Commit to creating 60 GWh of battery production within the UK via gigafactories by 2030.
• Support development of a fuel cell gigafactory with 2GWh capacity to support cars, heavier vehicles and rail units by 2030.
• Roll out a comprehensive and long-term skills strategy that supports auto needs combined with piloting greater flexibility in the Apprenticeship Levy to support retraining.
• Commit to the UK becoming a global leader in developing, testing, trialling and deploying Connected and Automated Vehicle (CAV) technology.

Manufacturing Competitiveness

• Introduce a new ‘Build Back Better Fund’ to support good manufacturing jobs for the future and help lower manufacturing costs such as energy.
• Allow net zero critical industries, such as manufacturers of low carbon, hydrogen and battery vehicles, to access the same benefits and compensation schemes as energy intensive industries and get more support within the UK Emission Trading Scheme (ETS).
• Fund trial and demonstration projects to explore the use of hydrogen during manufacturing.
• Ensure the UK tax system helps position Britain as an attractive destination for global investment.

Consumer, Market & Trade

• Develop a holistic infrastructure strategy to ensure that at least 2.3 million public charging points are in place by 2030.
• Commission an independent review to holistically consider the long-term future of fuel duty and CO2 based taxes like vehicle excise duty in a decarbonised sector.
• Continue Plug-in Vehicle Incentives beyond their current term and exempt Ultra Low Emission Vehicles from taxation for the next five years
• Work with the industry to develop an ambitious, forward-looking trade strategy, which targets the sector’s most important markets.

Further information about the UK automotive sector is available in SMMT’s Motor Industry Facts 2020 publication.