Eclipse Seen Between Economic Trend and UK Car Production

May 21, 2012 /

UK manufacturing continues to buck the economic trend as the Society of Motor Manufacturers and Traders (SMMT) figures for April show that there were 11.8 % more cars built in the UK so far this year than in the same period last year, propelled by strong demand.

John Leech, UK head of automotive at KPMG, comments: “This announcement follows a series of similar notices by other motor manufacturers so that now all car plants in the UK have long-term production plans in place. But what is the reason for this outstanding success? Undoubtedly, the car firms, Government and unions have played a role as well as the UK’s heritage for making cars which means we have retained many of the skills that car companies are looking for, but a recent KPMG study also showed that weaker Sterling and recent tax initiatives has made the UK the most cost-competitive of all developed countries for car production.

“Of course we should not rest on our laurels, the Eurozone crisis means that car companies and their supply chain should be making contingency plans for a possible Greek exit from the Euro. In particular, we recommend reviewing long-term supply contracts now with Greek suppliers. In addition, for those with operations in Greece, it is important to create buffer liquidity and inventory to deal with any transition to a new currency.”

There were 94,352 cars produced in April, up by 9.3 per cent on the same month in 2011.

The report comes as General Motors announced that the Ellesmere Port plant will produce the new Astra which is welcoming news for the region and reflects an overall resilient UK motor industry.

Paul Everitt, SMMT chief executive, said: “UK manufacturing of cars, commercial vehicles and engines increased in April, boosted by strong export demand that is almost 10 per cent ahead of last year.

“Sustained investment is delivering desirable products to markets around the world and efforts by employees, trades unions and government are helping ensure the UK remains one of the most competitive locations for global automotive companies.”

 

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