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The automotive industry in the UK has long been one of the largest contributors to the country’s GDP and export earnings. Both UK automotive production and auto sales have witnessed steady growth over the last few years. The latest success achieved by the UK automotive industry comes as total automotive production in UK reached its highest level since 1999, and it is expected that the industry will grow more in the next five years than in the past five decades.
According to a recent report from UK’s SMMT (The Society of Motor Manufacturers and Traders), UK automotive production achieved a 17-year high in 2016, with 1.73 million cars produced by 15 manufacturers, representing an 8.3% rise on 2015 car production. Last year, ten new models were introduced to the market in UK, of which nine models are from premium brands. This helped make the UK the second biggest producer of premium cars after Germany and the third biggest car producer overall in Europe.
To be specific, SMMT reports that passenger cars accounted for 95% of total automotive production and 96% of UK vehicle exports in 2016. Light vehicle engine output grew 7.5%, to 2.54 million units, supported by the new Jaguar Land Rover plant in Wolverhampton, which provided a boost to UK’s domestic demand for engines, which grew significantly in 2016. Exports of UK engines still accounted for the majority of production, with 55% of those produced destined for export markets. The UK has a reliance on Europe, which supplies a significant proportion of components that go into UK built vehicles, highlighting the critical importance of tariff-free and barrier-free trade for the UK automotive sector.
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Exports of UK produced cars grew 10% in 2016, with 78% of production intended for external markets. The majority of which (56%) was traded with the EU, a slight decline in terms of percentage share. Exports of cars to the rest of the EU still grew 7% in 2016, to just under 750,000 for the year in total. UK car exports to non-EU markets were stronger still with growth of 13%, rising from an increase in popularity for UK premium cars in markets such as the US.
UK Commercial Vehicle (CV) output remained broadly steady in 2016, with an output of 94,000 vans, trucks, buses and coaches, a small 0.6% decline. Exports of UK built CVs represented 4% of total UK vehicle exports, with 16.2% growth in 2016. The number of CVs manufactured for export markets continued to grow, with 58.4% of production exported, the largest proportion in seven years. This was driven by an increase in exports to the EU, which grew 25% in 2016 and accounted for 94% of total CV exports.
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The overall picture for UK automotive production remains positive despite uncertainties caused by Brexit. The report from Auto Analysis predicts that the UK vehicle production in 2017 will reach 1.9 million units, led by strong growth to export markets for both cars and CVs and increased investment in the UK providing a boost to engine production. Many of the projections for future production are based on assumptions of transition as the UK leaves the EU, with the latest report suggesting the UK may fall just short of its 2 million vehicle output potential in 2020.