New Market Report Now Available: United Kingdom Autos Report Q3 2012

Recently published research from Business Monitor International, "United Kingdom Autos Report Q3 2012", is now available at Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 19 October 2012

The autos industry in the UK is heading for an all-round transformation, thanks to increasing investment commitments from international carmakers and suppliers as well as the supportive attitude of the British government. In May 2012, General Motors Europe's (GM) Opel/Vauxhall unit announced that Ellesmere Port would be the lead plant of only two in Europe building the next generation Astra. This was followed by BMW's June 2012's announcement of plans to build the hi-technology engines for its i8 hybrid sports car at its plant in Birmingham.

Further evidence of its improved competitiveness and advancement in high-end technology in the autos manufacturing sector came to light when the industry posted its first quarterly trade surplus since 1976 in Q112, on the back of rising foreign demand for UK-made cars. Strong growth in exports to the US, China and Russia helped the value of autos exports reach GBP6.1bn (US$7.7bn) in Q112, GBP561mn (US$713mn) ahead of the value of imports. All of this prompts BMI to forecast a 13% growth in vehicle production in the UK between 2012 and 2016.

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Things, however, look less optimistic from the point of view of domestic sales. BMI expects sales recovery of passenger cars as well as commercial vehicles to be impeded by increases in fuel duty, road tax and company car tax, as revealed by Chancellor George Osborne in his budget. More downside will come from the hike in prices of new cars above the rate of inflation. We accordingly forecast a marginal 0.8% year-onyear (y-o-y) growth in new vehicle sales during 2012. Although the industry will embark on growth averaging 3.1% y-o-y between 2013 and 2016, sales will only reach 2.56mn units by end of forecast period - falling short of the nearly 2.8mn units sold in 2007.

Despite the dominance of Ford, Vauxhall and other established brands, new players continue to get attracted towards the market, mostly boosted by UK's comparatively stronger demand and the size of its autos market. In May 2012, Romanian carmaker Dacia's import centre received its first batch of 22 left-hand Duster SUVs, as the brand prepares to launch in the UK, Fleet News reports. Meanwhile, established players such as Mercedes-Benz are looking to launch a 'production revolution' in the UK over the next few years, aimed at reducing CO2 emissions.

In order to aid and benefit from the growth potential, autos suppliers are being urged by the UK government to establish new production facilities in the country. In May 2012, the government was reportedly in discussions with several suppliers, including Bosch, Siemens, Continental and ZF Friedrichshafen for increasing the use of local parts in cars manufactured in the UK. The discussions are being supported by Jaguar Land Rover, Vauxhall, Nissan Motor, Honda Motor and Toyota Motor as they aim to reduce production costs through increase in parts localisation.

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