SMMT: Best September for vehicles manufacturing since 2020

UK car manufacturing rose by 39.8 per cent in September, with figures from the Society of Motor Manufacturers and Traders (SMMT) showing that 88,230 vehicles left British factory lines during the month – 25,105 more than during the same month of last year. SMMT considers September a “triple success for the sector,” with it being the strongest month of growth in 2023, the best September since 2020, and UK car making now reaching 659,901 units year to date – some 14.9 per cent above the same period in 2022.

Output increased for both domestic and export markets, with production for the UK up 65.9 per cent to 23,503 units and overseas shipments rising 32.2 per cent to 64,727 units. Notable growth occurred in major markets: the US up 19.8 per cent to 6,591 units; China up 28.2 per cent to 4,776 units; and Turkey up 212.0 per cent to 4,162 units. However, the EU continues to be Britain’s leading trading partner by some distance, with 37,563 UK-built cars shipped to the bloc in the month, up 46.1 per cent on last September and representing 58.0 per cent of the sector’s overseas trade.

The volume of British cars exported to global markets has risen by 16.3 per cent to 524,973 units since January, with electrified vehicles accounting for 37.5 per cent of outbound shipments, up from 26.4 per cent a year ago. Given the increasing importance of EV trade with mainland Europe in particular – bilateral trade which has more than doubled in value in the last three years – SMMT emphasises that the tariff-free trade set out in the UK-EU Trade Cooperation Agreement (TCA) “must be maintained.”

New rules may mean pricier EVs

SMMT considers this arrangement “under threat” from new rules for origin for batteries that will come into force from January 2024. Given the value of batteries to the total cost of an EV, the rule changes “threaten the competitiveness of both UK exports to the EU and EU imports to the UK market,” states SMMT. Failure to comply will result in a ten per cent tariff. If fully passed on, SMMT calculates that this would raise the average cost of UK-built battery electric vehicles (BEVs) by £3,600 in Europe, while EU-made BEVs sold in the UK would see an average £3,400 price hike. “A three-year delay to the implementation of these new requirements would, however, maintain competitiveness, supporting British and European manufacturers, and is readily achievable through the existing TCA framework with no need for formal renegotiation,” adds SMMT.

“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,” says Mike Hawes, SMMT chief executive. “With countries around the world shifting to zero-emission motoring, Britain is well placed to be a global EV manufacturing hub if the investment and trading conditions are right. Given the increasing importance of electrified car production, the first and urgent step is for the UK and EU to agree to delay the tougher rules of origin requirements that are due imminently. This would give the necessary breathing space for automotive sectors on both sides of the Channel to scale up gigafactories and green supply chains, both of which are essential for a stable, long-term transition.”

SMMT’s latest report, Open Roads – Driving Britain’s global automotive trade – contains the association’s recommendations for long-term automotive growth.