Car factories boom boosts the economy

Car factories boom boosts the economy

But industry warns that output would only continue to rise if sector is able to maintain competitiveness

BRITISH car production accelerated to its highest level in 17 years in November amid rising domestic and international demand.

Almost 170,000 vehicles were manufactured last month, according to the latest figures. In the year to November 30, 1.61m cars were produced in the UK, a 9.6% increase on the 1.47m made in the same period the previous year.

It is the highest 11-month figure since 1999. The increase could provide a boost to the economy, as the automotive industry is estimated to account for 4% of GDP and 12% of UK exports.

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Car plants rolled out 169,247 vehicles in November — up 12.8% year on year, according to the Society of Motor Manufacturers and Traders (SMMT).

The boost follows a fall of 1% in the year to October, as domestic demand fell by 10.9%. Data from the trade body shows how UK demand bounced back in November, with production of cars for the home market up 14%. Export manufacturing rose 12.5% in the year, from 120,484 cars to 135,502.

By November 30, British factories had produced almost 56,000 more cars than they made throughout the whole of 2015.

Mike Hawes, chief executive of the SMMT, warned that output would continue to rise only if the sector is able to maintain its competitiveness once Britain has left the European Union. “’Made in Britain’ is a badge coveted by car buyers worldwide, and these latest figures highlight not just that international appeal but the fact that the UK is a globally competitive place to make cars,” he said. “These results … will continue only if we can maintain the competitive trading conditions that have enabled the UK to become an automotive success story.”

Last month Hawes met David Davis, secretary of state for exiting the European Union, emphasising that being part of the single market had “helped to make the UK automotive sector among the most competitive in the world and a critical part of the UK economy”. It was essential that the UK retained such benefits for the industry to maintain its success, he argued afterwards.

The government wrote to Nissan in the autumn pledging to take steps to protect it from the consequences of Brexit. The car maker announced in October that it would build two new models in Sunderland, securing thousands of jobs at its plant there.

The industry estimates that 78,000 workers are employed in the UK car manufacturing supply chain, with seven big manufacturers based in the country. The SMMT estimates that more than 2,000 companies involved in the chain contributed £4.3bn in value added each year.

Exports continue to drive British car production. In November 2016, 80.1% of vehicles made in the UK were shipped abroad.

This article first appeared in The Times