New data from the Society of Motor Manufacturers and Traders (SMMT) confirms that the UK car industry is in good shape at present, reaching a 17-year high for vehicle production.
A total of 1.72 million new cars rolled off British factory lines in 2016, the highest figures seen since the previous Millennium in 1999. 2016 also saw a boom year for car exporting, with a 10.3 percent rise to 1.35 million vehicles sent overseas.
It’s not all good news, however, with the SMMT’s latest figures indicating that investment in the UK car industry tailing off, down by a third from £2.5bn in 2015 to £1.66bn in 2016.
Indeed, Mike Hawes, chief executive of the SMMT, admits that the record-high car manufacturing figures fly in the face of the “uncertainty” derived by the Brexit vote to leave the European Union (EU).
“We do see companies delaying some investment decisions because of [the] uncertainty,” said Hawes.
The car industry remains a huge contributor to Britain’s goods exports, generating revenue of more than £71bn a year. However, concerns are abound that the industry could suffer from restrictive tariffs in the event that a free trade agreement cannot be reached between the UK and the EU members. EU nations purchase over 50 percent of all British-made motor vehicles and failure to obtain a free trade agreement by Prime Minister, Theresa May could hamper future investment in UK car manufacturing.
It’s not a case of British vehicle manufacturers sitting around and waiting to discover their fate, however. The SMMT confirmed that companies are working together to discover new and innovative ways to increase the number of British-made components in new cars off the factory lines.
Just two-fifths (41 percent) of components in cars manufactured in the UK are sourced domestically at present. It’s believed the industry must work to increase this figure to 55 percent in order to evade unwanted tariffs under conventional free trade agreements. This boost to the UK supply chain would generate up to £4bn in additional revenue.
“Obviously we want to increase local content in cars, but supply chains have been depleted over the years,” added Hawes.
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