The UK car industry is facing significant threats and requires immediate support to secure its future, industry leaders warn.
Experts caution that without intervention, the sector could suffer severe consequences. The industry is grappling with a range of challenges, including the impact of Brexit, supply chain disruptions, and increasing competition from international markets.
Prime Minister Rishi Sunak and other government officials are in discussions with the European Union to address looming rule changes that could further jeopardize the industry. These changes, related to the Brexit trade deal, could impose tariffs on exports and increase production costs, particularly affecting the electric vehicle (EV) segment.
Stellantis, a major player in the UK automotive sector, has voiced concerns over the potential closure of its factories. The company, which owns brands like Vauxhall, Peugeot, Citroen, and Fiat, had planned to produce electric vans in the UK. However, new rules on the sourcing of parts could result in 10% tariffs on exports to the EU, threatening these plans.
Currently, to qualify for tariff-free trade, 40% of the value of an electric vehicle must originate in the UK or EU. This requirement will rise to 45% next year and 60% for battery packs. By 2027, the thresholds will increase to 55% for vehicles and 70% for battery packs. Stellantis has indicated that rising raw material and energy costs make it challenging to meet these requirements.
The European Automobile Manufacturers' Association has also requested an extension of the deadline, arguing that supply chains are not yet ready for these stringent rules.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), called for a practical approach to avoid implementing the new rules prematurely. He stressed that these changes could undermine the competitiveness of UK plants and deter future investments.
The UK is at a critical juncture in developing its battery manufacturing capabilities, especially as other regions like the US, China, and the EU make substantial investments. While the UK still has an opportunity, the window for action is closing rapidly.
Prime Minister Sunak highlighted Nissan's £1 billion investment in battery manufacturing in the North East as a positive development. He plans to discuss further investment opportunities with Japanese business leaders.
Business and Trade Secretary Kemi Badenoch noted that the issues facing the automotive industry are not solely due to Brexit but also stem from global supply chain disruptions caused by the pandemic and the war in Ukraine. She has been in talks with EU counterparts to review these challenges.
Amid these concerns, the UK government announced nearly £18 billion in investments from Japanese firms, aimed at creating jobs and funding projects in clean energy and affordable housing. Sunak described this as a "massive vote of confidence" in the UK economy. However, the Labour Party criticized the Conservative government, claiming that foreign investment in the UK has significantly declined under their leadership.
source: bbc