Demand helps support our production

Marc Sidwell
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BRITAIN’S car industry continues to defy those who say this country doesn’t make things any more. And demand at home is helping to drive that resurgence. Industry lobby group the SMMT released data yesterday showing the UK is now the second-largest EU car market by new registrations.

Demand has risen year on year in the UK, unlike the other big European car markets of Germany, France, Italy and Spain. The domestic picture is not all rosy, with commercial vehicle registrations down 15.9 per cent in November to 22,860. Private demand driving 149,191 new car registrations that month is significant, but registration volumes are well below pre-recession levels, which were some 15 per cent higher, at 2.4m units a year or more.

But UK demand is only half the story. UK car production is expected to grow at nine per cent a year to 2.2m vehicles in 2016, according to a report by KPMG published this September and commissioned by the SMMT. That’s because the sector is doubly cushioned from the collapse of demand in the ailing Eurozone, not just by domestic demand, but also by export demand outside the EU. We export around 55 per cent of car production outside the EU, more than any other EU nation. On aggregate, 83 per cent of vehicle production from France, Italy and Spain is sold within the EU.

That said, investors cannot rely on a uniformly rosy picture in UK car production. Witness Ford’s October closure announcements in Southampton and Dagenham. But the trends are heading down the right road, at home and abroad.