How the UK’s car manufacturing scene is holding up
According to the Society of Motor Manufacturers and Traders (SMMT), the UK recorded a 17-year high for car manufacturing in March 2017. There were more than 170,691 vehicles produced throughout that month at plants based in the UK, which was up by 7.3% compared to March 2016.
The release of the new registration plate means that March is obviously always a busy month for those working in the car industry. March and September are always forecast to be the industry’s busiest months for sales, meaning manufacturing is also up in the months of March and September to meet the high demand for new registrations. But 2017 saw the most cars produced in Q1 than the past 17 years – 471,695 units in total, a 7.6% increase on previous years.
The high quality of vehicles from UK manufacturers or built on British shores have also resulted in the automobiles receiving recognition both domestically and internationally. For instance, Range Rover won ten awards within the three months of production, and the Evoque secured 22 international awards. The Nissan Qashqai has been the winner of over 13 global awards too, while the Jaguar E-PACE was named Top Gear Magazine’s 2017 Crossover of the Year among other prestigious feats. As UK manufacturers are continuously recognised on a global scale for the high quality of their vehicles, it’s no surprise that global demand is driving the UK’s car production industry.
Demand overseas for cars manufactured in the UK
More than 130,000 of the 170,691 cars produced at UK-based plants during March 2017 were shipped abroad. This is a 10.6% increase on March 2016’s global exporting. The US were a particularly large customer for the UK in 2016, increasing their exports to 47.2% and now accounting for 14.5% of the UK’s car exports, making them the UK’s second biggest market behind the EU.
Compared to the previous year, exports to the EU also increased by 7.5%. This demonstrated continuous progression for global exporting. A total of 758,680 cars were exported to the EU in 2016, which was accountable for half of all overseas exports last year. In fact, more than one in two exported cars were to Europe – and out of all the cars manufactured in the UK, around eight out of every ten cars are exported overseas. It is clear that exports are driving the UK’s new car production, with the UK exporting to over 160 countries worldwide.
Demand domestically for cars manufactured in the UK
The positive news about the global exports of cars built in the UK unfortunately doesn’t seem to have been carried across when looking at demand domestically. Following the vote for Brexit, the UK’s domestic home demand has dropped. Despite not having much of a dent on the production volumes, some industry experts have raised concern, attributing the drop to fears of the UK economy and uncertainly about leaving the EU.
- The Trades Union Congress calls for manufacturing job shortages to be tackled by 2030
- Daimler launches two new bus models as part of its connected strategy
- Smurfit Kappa acquires Papcart, expanding its presence across Europe
If anything though, the decline should highlight just how important global exports are for Britain. In Q1 alone, overseas buyers placed orders for more than 76% of the UK’s output.
Concerns surrounding Brexit
As Brexit draws ever nearer, a dark cloud continues to hang over the UK’s car industry. According to the SMMT, car manufacturing in the UK dropped by 9.8% in October and uncertainty regarding Brexit was blamed for the decrease alongside model changes and market turbulence. Vehicle production for markets overseas also decreased 9.3%, though exports still make up 82.7 per cent of the entire output.
Mike Hawes, the chief executive at the SMMT, commented: “The fifth consecutive month of decline for UK car manufacturing is undoubtedly concerning and, while a number of factors have been at play, there is no doubt that business and consumer uncertainty is having a significant impact.
“With eight in ten British-built cars destined for overseas markets, the majority to the EU, the sector’s dependence on exports cannot be downplayed. Europe is our largest trading partner and securing the right Brexit agreement which allows free and frictionless trade is vital for the future health of our industry.”
Could it be that the used car market receives a boost from Brexit though? Experts have predicted that prices for new car models will increase as the pound gets weaker and other factors come into play while the UK is exiting the EU, so focus may possibly shift and motorists may focus their attention on the second-hand car market.
All will surely become much clearer when Brexit comes into force at 11pm on March 29th 2019.
Canoo Awards Manufacturing Contract to VDL Nedcar
Canoo, a trailblazing company in the electric vehicle (EVs) manufacturing industry, has officially announced owned and contract manufacturing plans that will ensure the company manages to deliver on its promise to consumers of production and delivery of vehicles in Q4, 2022.
During the company’s first Investor Relations Day, Chairman & CEO of Canoo, Tony Aquila, named VDL Nedcar as its contract manufacturing partner. VDL Nedcar, which I’m sure many of you will already have heard of, is the only independent Vehicle Contract Manufacturer in the Netherlands and has enjoyed fifty years of growth under owners, including Mitsubishi Motors and Volvo cars. According to the report, Nedcar will manufacture the Lifestyle Vehicle for the United States and European Union markets, while Canoo builds a US-based mega micro-factory.
"We conducted an exhaustive search, invested significant amounts of time and resources that span the globe, in our search for our Phase 1 contract manufacturer. VDL Nedcar is the right partner," said Tony Aquila, Investor, Chairman and CEO of Canoo, Inc. "They are the top trusted European manufacturer building high-quality products for leading OEMs, and they significantly outcompeted the other contenders. VDL is also independently owned by the van der Leegte family of entrepreneurs - which aligns with our commitment to support businesses that form the backbone of communities. This strategic partnership will enable us to deliver vehicles to market while we build our Phase 2 factory in Oklahoma. It also strongly positions us for geographic expansion in Europe and builds a lasting relationship with VDL Groep of companies. Our investment will help us scale quickly and fulfil our mission to bring affordable, purpose-built EVs to Everyone."
Canoo and VDL have already gotten to work on vehicle manufacturability and production planning so that Canoo can successfully lay the groundwork for its upcoming US manufacturing operations expansion, which will be completed in Oklahoma in 2022. The Nedcar facility currently expected to produce around 1000 units for both the US and European markets in 2022, with an additional 15000 targeted for the following year.
"Canoo's bold approach to designing and building electric vehicles makes them an ideal partner as we work together to shape the future of mobility," said John van Soerland, CEO of VDL Nedcar. "This partnership advances our strategic vision to provide a contract manufacturing solution and expand our expertise in the EV arena."
Currently, Canoo is entering its GAMMA phase of development and is on track to start production soon. The company intends and expects to launch its Lifestyle Vehicle in Q4 2022, closely followed by the Multi-Purpose Delivery Vehicle and Pickup Truck.
Watch this space.