News
  • Login
  • Home
  • News
  • Sport
  • Worklife
  • Travel
  • Reel
  • Future
  • More
Wednesday, August 13, 2025
No Result
View All Result

NEWS

3 °c
London
8 ° Wed
9 ° Thu
11 ° Fri
13 ° Sat
  • Home
  • Video
  • World
    • All
    • Africa
    • Asia
    • Australia
    • Europe
    • Latin America
    • Middle East
    • US & Canada

    Man charged with murder of Australian couple in graffiti-covered house

    National Guard troops appear in Washington DC as mayor rejects Trump’s ‘authoritarian push’

    Mohamed Salah: Egyptian king – where it all began for Liverpool star

    South Korea’s ex-first lady arrested in bribery probe

    Emmanuel Macron admits French colonial ‘repression’ in Cameroon independence struggle

    Drones laden with explosives kills three Colombian soldiers

    Gaza talks to focus on releasing all hostages in one go, Netanyahu hints

    Evacuations in Alaska after glacial melt raises fears of record flooding in Juneau

    Worst coral bleaching on record for Western Australian reefs

  • UK
    • All
    • England
    • N. Ireland
    • Politics
    • Scotland
    • Wales

    Manchester Arena bomb plotter charged with prison guard attack

    London chess prodigy, 10, becomes Woman International Master

    Why Gers figures will play a prominent role in the Scottish election

    Hefin David, Welsh Labour politician and MS for Caerphilly, dies suddenly

    Claire’s Accessories on brink of collapse putting 2,150 jobs at risk

    I had knife pulled on me in migrant camp, says Conservative shadow minister

    Jack Grealish transfer: Everton complete loan signing of Manchester City and England winger

    Frankly, what have we learned from Nicola Sturgeon’s memoir?

    Dumfries Maggie’s cancer care centre plans given green light

  • Business
    • All
    • Companies
    • Connected World
    • Economy
    • Entrepreneurship
    • Global Trade
    • Technology of Business

    The UK car industry is at a tipping point

    Trump’s BLS nominee floats ending monthly jobs report

    Sylvanian Drama lawsuit dropped – but account will change its name

    Drivers warned about scam car finance payout calls

    UK jobs market cools as vacancies fall

    US inflation holds but underlying prices creep up

    Nvidia and AMD to pay 15% of China chip sales to US government

    How Europe is vying for rare earth independence from China

    Why the US is taking a cut from China sales

  • Tech
  • Entertainment & Arts

    Dancers say Lizzo ‘needs to be held accountable’ over harassment claims

    Freddie Mercury: Contents of former home being sold at auction

    Harry Potter and the Cursed Child marks seven years in West End

    Sinéad O’Connor: In her own words

    Tom Jones: Neighbour surprised to find singer in flat below

    BBC presenter: What is the evidence?

    Watch: The latest on BBC presenter story… in under a minute

    Watch: George Alagiah’s extraordinary career

    BBC News presenter pays tribute to ‘much loved’ colleague George Alagiah

    Excited filmgoers: 'Barbie is everything'

  • Science
  • Health
  • In Pictures
  • Reality Check
  • Have your say
  • More
    • Newsbeat
    • Long Reads

NEWS

No Result
View All Result
Home Business Companies

The UK car industry is at a tipping point

August 13, 2025
in Companies
19 min read
250 2
0
491
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter


Theo Leggett profile image
Theo Leggett

International Business Correspondent

BBC A treated image of a Mini Cooper S car on the production line at BMW AG's Mini final assembly plant in Cowley, UK
BBC

A gleaming white Vivaro van drove slowly off the production line at Vauxhall’s factory in Luton, beeping its horn, while workers cheered and crowded around taking photographs.

Behind it, the production line came to a halt – forever.

The Luton plant began building cars in 1905. It kept operating for the next 120 years, taking time out to build tanks and aircraft engines during World War Two. But on 28 March, that came to an end.

The factory shut down, a victim of cutbacks at Vauxhall’s parent company, Stellantis.

Justin Nicholls, a production shift manager, was one of the 1,100 workers there – he had worked at the plant for 38 years. “It was devastating, because it came out of the blue”, he says. “It was a complete surprise.”

It followed the closure of Honda’s car factory in Swindon in 2021, and Ford’s engine plant in Bridgend the year before.

Together, they have come to symbolise an apparent long-term decline in the UK motor industry.

Daily Herald/Mirrorpix via Getty Images People working on the Vauxhall Victor production line at the Vauxhall motor factory in Luton, Bedfordshire in 1968
Daily Herald/Mirrorpix via Getty Images

Vauxhall’s Luton plant has been building cars since 1905 until production stopped earlier this year

In all, just 417,000 new cars and vans were built in the UK in the first six months of 2025, according to the Society of Motor Manufacturers and Traders (SMMT) – the lowest for that period since 1953.

Output for the year is expected to be around 755,000 vehicles — lower even than during the Covid-19 pandemic.

The SMMT’s chief executive, Mike Hawes, described the situation as “depressing”.

The sector contributes some £22bn a year to the economy, according to the SMMT, and as recently as 2023 automotive manufacturing employed some 198,000 people in the UK.

Andy Palmer, who was previously chief executive of Aston Martin, believes the ecosystem – and the sum it contributes to the economy – can only survive if the industry maintains its current scale.

“There is a critical mass of employment,” he explains. “Once you go below that, you see it all fall apart.

“You don’t have the university courses, you don’t have people coming across from the aero industry, you don’t have the pipeline of skilled engineers that allow the luxury firms to exist, and so on.”

And the knock-on effect of this could affect regions already facing challenges.

“If we think about parts of the UK that have automotive plants, they’re often disadvantaged regions,” says David Bailey, professor of business economics at Birmingham Business School.

“Losing these good quality jobs would have a big impact in terms of wages for workers and also a knock-on effect in terms of the multiplier on the local economy.”

He is concerned about what has already been lost. “I’d argue that actually we’ve let too much of this go already. I think once it’s gone, it’s really gone.”

The question is, can the industry recover – or is it too late?

A concealed deeper problem

The UK car industry is sprawling. Alongside large factories run by the likes of JLR, Nissan, BMW MINI and Toyota, there is a network of suppliers and high-tech specialist engineering firms, along with a number of smaller, luxury car firms, such as Aston Martin, Bentley, Rolls-Royce and McLaren, plus bus and truck manufacturers.

In 2016, the UK produced 1.82m new vehicles – more than at any point since 1999. Yet even at that point, storm clouds were already gathering. And the industry has suffered further over the past decade.

Factory closures have had an impact, but other factors have been at play as well, including uncertainty over US trade policy, which has hit exports to a major market.

Then there was the role of Brexit.

Adam Vaughan/EPA/Bloomberg via Getty Images A Range Rover sports utility vehicle on the production line at the Jaguar Land Rover automobile manufacturing plant in Solihull, UK
Adam Vaughan/EPA/Bloomberg via Getty Images

One of the UK’s leading manufacturers, Jaguar Land Rover (JLR), has deliberately moved upmarket in recent years, meaning it now sells fewer cars – also contributing to the lower figure of UK car production

“Obviously, Brexit had a big impact”, says Santiago Arieu, senior autos research analyst at Fitch Solutions. “It created uncertainty and complicated future visibility.”

As a result, experts say new investment suffered – just as the industry was gearing up for the massive changes being brought by the transition to electric vehicles.

The agreement with the EU to guarantee continued tariff-free trade soothed the industry’s concerns when it came. But by then, there was another challenge to contend with.

The pandemic caused havoc within the industry globally.

In 2020, output dropped by nearly a third, hitting levels not seen since the mid-1980s. It also threw finely tuned global supply chains out of kilter and created shortages of vital parts.

Although demand for new cars was spiking, manufacturers simply couldn’t build them quickly enough.

Reuters/ Chris Radburn A man holds a leaflet as workers protest following Stellantis' announcement of its plan to shut its Vauxhall van factory in LutonReuters/ Chris Radburn

‘Losing these good quality jobs would have a big impact in terms of wages for workers and also a knock-on effect in terms of the multiplier on the local economy,’ says one expert

All of this caused short-term disruption – but the impact concealed a deeper, structural problem for the UK industry.

Quite simply, it has become an expensive place to build cars.

Part of this is to do with labour costs. Although lower than in some other Western European countries, particularly Germany, they are around twice the level seen in Central European nations such as Poland, Slovakia and Hungary.

Then, there are energy costs. British manufacturers currently pay some of the highest electricity prices in the world.

“Car makers operating in the UK also have factories in Europe and elsewhere, so it’s not hard for them to find a replacement for their UK production,” explains Felipe Munoz of JATO Dynamics.

The former chief executive of Stellantis, Carlos Tavares, has previously criticised the cost of manufacturing cars in the UK and northern Europe – while holding up the company’s Kenitra factory in Morocco as a model of efficiency.

The investments starting to bear fruit

When the Luton plant shut last year, it was estimated by Luton Borough Council that the move could cost the regional economy £300m per year.

A small part of the workforce relocated to Stellantis’ other UK plant, at Ellesmere Port in Cheshire, where the company is in the process of investing £50m in expanding production.

Of those who have not relocated, some retired. “[Others] are taking quite a reduction in pay”, says Gary Reay, who was a representative of the Unite union at the plant.

The factory site has been bought by a property firm, Goodman – it plans to create more than 1,700 jobs at a new industrial park.

Mr Reay is unimpressed. “The problem for the workforce… is this is years down the road… It’s too far away for most of our workers.”

Toby Melville/PA Wire An employee inspects a vehicle at the Vauxhall factory in Luton Toby Melville/PA Wire

Just 417,000 new cars and vans were built in the UK in the first six months of 2025

Yet there is hope in some quarters: it is possible this year’s output may turn out to be a low point, as recent investments start to bear fruit.

In 2024, for example, Nissan stopped building its ageing electric Leaf model at its Sunderland plant — having previously been building about 30,000 a year. But it is due to begin making a new version this year and will start building an electric version of the Juke in 2026.

Nissan is also one of the manufacturers set to benefit from investments in gigafactories. Nissan’s battery partner AESC is building one in Sunderland, which will be able to make power packs for 100,000 electric vehicles a year.

JLR’s parent company, Tata, meanwhile, is investing in its own plant in Somerset, through its subsidiary Agratas.

The government says it wants to increase the number of cars and commercial vehicles built annually to 1.3m by 2035. The SMMT believes 803,000 vehicles will leave the production lines next year but bringing that up to 1.3m looks like a very tall order, according to Mike Hawes.

Greg McDonald, the CEO of Goodfish Group, is also circumspect. “I don’t think many people think there’s going to be a resurgence,” he says.

His business makes injection moulded components for carmakers and has four sites across the UK. It also has a base in Slovakia.

“Suppliers like us are used to being constantly bid at for price and cost reductions, and there’s a limit to how much you can do.”

Diversifying or Chinese investment?

One way of mitigating this is for businesses to diversify – something more viable for smaller businesses in the sector.

Burnett’s Manufacturing, based in Northampton, is one of many automotive suppliers clustered around the Midlands Corridor. A manufacturer of specialist rubber and plastic parts, it relies on the motor industry for about 40% of its business. But it also provides components for shipbuilders and oil and gas firms.

According to technical sales manager, Rich Dixon, smaller companies are more flexible and able to adapt to changing circumstances.

“I think we’re lucky in some ways, because 60% of our business is diversified across many different industries,” he says. “The last thing you want to be is 100% automotive.

“The difficulty is that higher up the food chain, there are some big companies that are very reliant on automotive.”

Yang Dong/VCG via Getty Images Employees work on the assembly line of Altima sedan at the Xiangyang plant of Dongfeng Nissan Passenger Vehicle Company 
Yang Dong/VCG via Getty Images

Chinese giants such as Dongfeng want to expand their international operations

Some argue there is another way forward. Chinese giants such as Chery Group and Dongfeng want to expand their international operations – and see the transition to electric vehicles as an opportunity to do this in the European market.

“If you embrace the move to electric vehicles and become a leading light in attracting Chinese investment, then you can do what China did to us in the past, which is essentially use collaboration to rebuild your industry,” argues Andy Palmer, who now owns and invests in clean energy companies.

This would, he adds, require significant government action, including negotiations with Beijing.

The question is, is it already too late?

One senior executive, who has spent decades in the European industry, doesn’t believe the UK will become a major player in the EV market.

“I don’t think governments have spent the necessary time and energy preparing for the shift to EVs.

Chris J. Ratcliffe/Bloomberg via Getty Images A Bentley Bentayga sport utility vehicle in the final inspection area on the production line at the Bentley Motors Ltd. headquarters in Crewe, UK
Chris J. Ratcliffe/Bloomberg via Getty Images

The UK is home to a number of luxury car firms, such as Bentley

“I don’t see much opportunity for new players to come in,” says the executive, who asked not to be named. “It’s all about encouraging those who are already here to stay, and if possible to expand.”

Another option, Felipe Munoz believes, is that the UK could double down on its position as a key player in the market for high-end cars.

This could mean becoming a hub for the production of luxury Chinese designs, while allowing cheaper mass-market models to be built elsewhere.

“I think people globally are willing to pay a premium for a British-made luxury car,” adds Prof Bailey.

The Great British ‘brain drain’

There is plenty at stake here, and it goes beyond the impact on local communities when factories are lost or suppliers stop trading.

“I also worry about it in terms of impacts on productivity, exports, and research and development,” says Prof Bailey.

“Part of the reason why we’ve got poor productivity performance in the UK is that we have allowed too much manufacturing to go.”

This is where we differ from our European counterparts, argues Steve Fowler, EV editor for The Independent. “We tend not to support our homegrown industries in the same way that other countries do”.

What is harder to assess is the loss of national prestige. When MG Rover collapsed in 2005, there was an outcry, not just because thousands lost their jobs, but also because it was perceived as a symbol of the wider decline of British industry.

This became even more marked when MG – a classic British brand – became a boutique badge for cars made in China.

Bloomberg via Getty Images A Mini Cooper S car on the production line at a sideways angleBloomberg via Getty Images

‘The UK is a great place to make cars, we have incredible expertise’

Many of the upmarket brands that still build cars in this country deliberately trade on their British identity. Think of Rolls Royce, Bentley, McLaren and Lotus. Even BMW-Mini, a mass market manufacturer, is more than willing to wave the Union Jack – or rather, have it painted on door mirrors and roofs.

If those cars were no longer built in Britain, it might well be perceived as a national humiliation. And for some, the decline of the auto industry would almost certainly be perceived as a symptom of a much wider loss.

“I do think people are [becoming] much more aware of where things are made,” argues Mr Fowler. “This isn’t necessarily a nationalistic thing, but more a sustainability thing. Do you want your car to have travelled halfway around the world to reach you?”

Ultimately, he says, there is already “a bit of a brain drain of talent, because the opportunities, bluntly, aren’t here in the UK.

“[But] the UK is a great place to make cars, we have incredible expertise, we have some of the best engineers and people who can build them better than anybody else.”

Top image credit: Chris Ratcliffe/Bloomberg via Getty Images

BBC InDepth is the home on the website and app for the best analysis, with fresh perspectives that challenge assumptions and deep reporting on the biggest issues of the day. And we showcase thought-provoking content from across BBC Sounds and iPlayer too. You can send us your feedback on the InDepth section by clicking on the button below.



Source link

Tags: carindustrypointtipping

Related Posts

Drivers warned about scam car finance payout calls

August 12, 2025
0

Motorists have been warned to be on the alert for scammers posing as car finance lenders offering fake compensation.The...

Nvidia and AMD to pay 15% of China chip sales to US government

August 11, 2025
0

Chip giants Nvidia and AMD have agreed to pay the US government 15% of Chinese revenues as part of...

Ryanair boss considers raising staff bonus for spotting oversized bags

August 10, 2025
0

Ryanair boss Michael O'Leary has said the airline is considering increasing a bonus it pays to workers for identifying...

  • Ballyjamesduff: Man dies after hit-and-run in County Cavan

    510 shares
    Share 204 Tweet 128
  • Somalia: Rare access to its US-funded 'lightning commando brigade

    508 shares
    Share 203 Tweet 127
  • Google faces new multi-billion advertising lawsuit

    507 shares
    Share 203 Tweet 127
  • Uganda arrest over deadly New Year Freedom City mall crush

    507 shares
    Share 203 Tweet 127
  • George Weah: Hopes for Liberian football revival with legend as President

    506 shares
    Share 202 Tweet 127
  • Trending
  • Comments
  • Latest

Ballyjamesduff: Man dies after hit-and-run in County Cavan

August 19, 2022

Somalia: Rare access to its US-funded 'lightning commando brigade

November 23, 2022

Google faces new multi-billion advertising lawsuit

March 31, 2023

Stranger Things actor Jamie Campbell Bower praised for addiction post

0

NHS to close Tavistock child gender identity clinic

0

Cold sores traced back to kissing in Bronze Age by Cambridge research

0

Manchester Arena bomb plotter charged with prison guard attack

August 13, 2025

The UK car industry is at a tipping point

August 13, 2025

Trump’s BLS nominee floats ending monthly jobs report

August 13, 2025

Categories

England

Manchester Arena bomb plotter charged with prison guard attack

August 13, 2025
0

BBCHashem Abedi faces three counts of attempted murder, one of assault and one of possessing a knife in prisonThe...

Read more

The UK car industry is at a tipping point

August 13, 2025
News

Copyright © 2020 JBC News Powered by JOOJ.us

Explore the JBC

  • Home
  • News
  • Sport
  • Worklife
  • Travel
  • Reel
  • Future
  • More

Follow Us

  • Home Main
  • Video
  • World
  • Top News
  • Business
  • Sport
  • Tech
  • UK
  • In Pictures
  • Health
  • Reality Check
  • Science
  • Entertainment & Arts
  • Login

Copyright © 2020 JBC News Powered by JOOJ.us

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
News
More Sites

    MORE

  • Home
  • News
  • Sport
  • Worklife
  • Travel
  • Reel
  • Future
  • More
  • News

    JBC News