Although there are rarely UK-owned volume car manufacturers, the UK provides a manufacturing base for 7 of the world's leading volume vehicle manufacturers, 9 commercial vehicle production facilities, 17 of the world's top tier one suppliers, and around 20 of the world's leading independent automotive design engineering firms. UK is host to more global volume car manufacturers than any other country in Europe.
Turnover of the UK automotive sector as a whole is £45billion, contributing approximately 1.5% of GDP and employing some 715,000 people - both directly in vehicle manufacturing and in the supply and distribution chain. About half of added value comes from manufacturing and assembly, which represents about 15% of total UK manufacturing value added.
Annual 10 year totals for car production in the UK
Exports totaled nearly £20bn in 2000, greater than in any other manufacturing sector. 65% of UK automotive output is exported; conversely, 74% of UK car registrations are imports. This is a highly (and increasingly) globalized industry, with complex supply chains that reach across countries and continents.
The UK sector's particular strengths include design engineering, especially advanced technology in motorsport. They are home to the most successful global motor sport cluster, which commands 80% of the world market. Constructors including McLaren, Williams, Benetton, Stewart, BAR, Jordan, Lola, Prodrive and Reynard and engine designers and manufacturers such as Cosworth, Ilmor and Hart are all based in the UK, meeting the requirements of teams in Formula 1, CART, Formula 3000, the World Rally Championship, GT and Touring Cars.
Linked to this strong manufacturing base, there is growing global demand for the design engineering skills of UK-based companies such as Ricardo, Prodrive, TWR Engineering, Cosworth Technology, Lotus Engineering Millbrook, MIRA, Hawtal Whiting and MSX International. British designers are to be found in almost any automotive styling studio in the world.
The UK is also increasingly becoming a centre for engine production (with recent decisions by Ford, BMW and Toyota to invest in significant engine production facilities here), and in "premium" cars (from the new Mini, through Jaguar and Range Rover and super-luxury cars such as Bentley and Aston-Martin.
Engine Production ('000s) by plant
Imports Investment by global Tier 1 companies such as TRW, Johnson Controls, Lear Corporation, Magneti Marelli, Denso, Visteon, Delphi and Thyssen has had a similar positive effect on the quality of the UK supplier base. An estimated 7,000 automotive component companies operate in the UK, 90% of which are SMEs. Turnover in the UK components sector in 1999 was about £12bn.
Inward investment in UK manufacturing continues; notable recent examples include the decisions by Nissan, Honda and Toyota to increase their investments, plus increased investment by Ford in both Jaguar (Halewood and Coventry) and Land Rover, while GM have invested £130m to produce the next X83 van at IBC Luton. However, concerns about the unfavorable £/Euro exchange rate are already causing many vehicle manufacturers to source an increasingly large proportion of their components from elsewhere in Europe and may threaten the prospects of future investment. Recently, some commentators have also expressed concern that the position of the UK as a base for volume manufacturing may be under threat.
The UK retail sector is characterized by a high number of traditional franchised dealership groups and a few newer independent internet and import businesses. The EU's review of Block Exemption expired in September 2002, the UK Competition Commission's review of new car pricing, the emergence of new channels to market such as the internet and the changing ownership of retail operations mark this a period of uncertainty for the sector.