Friday 24 January 2025, Society of Motor Manufacturers and Traders

with Regional Engagement Director John McLellan-Grant

 

Our first meeting of 2025 and we gathered cheerfully in Disley Golf Club as staff scurried about preparing for their huge Burns Night dinner. We’d all arrived in cars, so with a keen interest in what is happening to the car industry in this country, amid tolls of doom in low new sales and spiralling costs. What’s going on…?

Our guest John McLellan-Grant explained that the SMMT has been around since the beginning of the last century. Frederick Simms was a pioneering British engineer, working with Daimler for the first long-distance car journeys in Britain (he coined the words “petrol” and “motorcar”). He established the RAC, and in 1902 believing the fragmented nature of the UK’s fledgling motor industry needed a representative body, set up the SMMT. It soon evolved as the organiser of the Motor Show.

SMMT interacts with a lot of other organisations. It talks with government departments in the UK (at least 8 of them!), in Europe and further afield; with manufacturers, suppliers, and traders. It’s a key member of the CBI and the British Chambers of Commerce. A lot of its job is networking; the income comes from over 900 companies which are its members, from Bentley to Bosch, making it independent of government, and if it didn’t exist you’d have to invent it.

For some members of our Club the key value of SMMT is in collecting data, particularly on registrations of new vehicles (cars and vans) and publishing on a monthly timetable. That’s how we know that car manufacture in the UK dropped by a whopping 30% in November, and that numbers have nowhere near caught up with pre-Covid sales (see below).

 

 

So we had some fun with statistics. There are 41 million vehicles on UK roads; 905,000 cars were built in the UK in 2023 but only 780,000 in 2024. Car exports were down by 15.5% in 2024, with 603,565 shipped worldwide (the full year 2024 figures are now on the SMMT website).  That tells us that manufacturing dropped 14% and exports by even more. Trouble at t’mill, eh?

More: as the graphic above shows, cars registered in the UK went from 1.6 million in 2023 to an estimated 1.9 million in 2024, a modest increase.  We are buying more cars, but not necessarily from our home-grown industry; yet we do well making engines, with around 1.6 million produced in 2023. Automotive overall employs over 800,000 people, a quarter of whom (198,000) are directly employed in manufacturing including near us at Crewe (Bentley), Derby (Toyota), Ellesmere Port (Stellantis/Vauxhall). The recent announcement that Luton is to close with production shifted to Ellesmere Port is bad news for them, probably good for us. Perhaps proximity to the ports makes a difference as 77% of UK vehicle production is for export. And employment is forecast to grow by another 40,000 by 2030.

November 2024 was a truly horrible month (that’s when I set this meeting up). Car production fell by over 30% compared with November 2023, but the really ghastly figure was that the home market collapsed by more than half, with sales dropping from 22,000 to under 10,000 cars (commercial vehicles such as small vans held up rather better). Why? Perhaps because 2023 had been a modestly good year; or perhaps it’s the doom and gloom from October’s Budget, hardly what anybody wanted.

What about electric vehicles? The government wanted the industry to sell 22% last year, but in fact one in five cars sold is now electric or hybrid (19.6%). That’s impressive, but fails to meet targets, and as most are hybrids, emissions remain a problem. There are of course loads of reasons, apart from up-front costs and a natural reluctance to change. Half the households in this country don’t have a private driveway so charging will be problematic, a big barrier in cities or areas like ours with terraced housing. The charging infrastructure still lags way behind what’s needed, with most public chargers installed in the south of England (infuriating if you need to drive up north). There used to be a £3,000 subsidy per car (not for my Tesla, still one of the most popular EVs!) but that went in June 2022. If you note that just one in 10 private buyers went electric in 2024, you can see how stubborn the resistance is – fleet buyers are more amenable. And yet the UK is the biggest BEV (battery electric vehicle) market in Europe, and there’s masses of choice – some 130 models are now available.

We discussed the way that demand is changing. Young people are not that interested in owning a car, we heard from several members; whereas getting the keys to your own vehicle was a mark of adulthood in days gone by, the young have other priorities. The cost of insurance probably makes that inevitable – my granddaughter (nearly 19) has a used car which cost £4,000. The insurance is also £4,000 and will be every year for some time. The days when she could be put cheaply on an adult’s insurance policy have gone. But it cannot be in the industry’s interest to lose a whole generation like this. So are the SMMT talking to the insurance sector? To our surprise, the answer was “No.”

I asked whether this is an industry which is resting too much on its laurels. In Europe, companies like VW which led in technology for years have found themselves on the back foot with EVs, just as the Chinese are flooding the world with inexpensive small EV models. It seems odd that both the eMini (Oxford) and the popular Nissan Leaf (Sunderland) have both ceased UK production. The UK faces both Net Zero pressures and ferocious international competition; we are supposed to get up to 50% of all cars made in UK to be electric by 2030, a very tall order, especially as all the tooling-up costs are to be borne by the car companies.

To help, the SMMT has asked (among other measures) for VAT to be halved to 10% for the next three years on battery electric vehicles, with targetted help for smaller manufacturers. The choices facing any government are stark and uncomfortable, especially with possible trade wars looming. But rapid decisions are required, or 2024 could be the start of a trend. At the moment, Net Zero targets are that 80% of private car sales in the UK will be electric by the end of 2030, and 75% of LGVs. On current trends? Not a chance.

You will have your own views on the interaction between slow growth, battered confidence, high costs and vacillating manufacturing reputation, and how the atmosphere can improve. It’s easier to make speeches about this than to get effective action (believe me). But John’s tour de l’horizon for us was also a tour de force, attracting many questions and much heated debate. Perhaps that is a good sign for the future; the UK automotive industry has many decades to run yet.