Growth opportunity worth £2bn to UK auto suppliers

2 mins read

The Automotive Council has highlighted a £2 billion growth opportunity for UK component suppliers as UK car makers enjoy an unprecedented period of success.

Its latest report assesses the 're-shoring' potential for 'upstream' automotive suppliers – in other words, the capacity for the UK to increase local supply of components and raw materials which are currently imported. The £2bn figure comes on top of £3bn identified last year for supply direct to vehicle manufacturers, on which progress is being made. Industry experts point to the accelerating growth potential in the automotive sector as well as local-sourcing benefits of lower logistics costs, greater flexibility and faster response times. Mike Hawes, SMMT chief executive, said: "A strong domestic supply chain is vital to the success of the UK automotive sector. We want the UK supply chain to capitalise on the renaissance in UK vehicle manufacturing and this report sets out both the opportunity and the confidence that exists amongst companies. "Continued government support through the Automotive Council is still required, however, particularly in facilitating access to finance and stimulating innovation – areas in which many companies are still encountering problems." Currently around one third of the components in a UK-built vehicle are sourced in the UK. The report identifies a realistic aim to increase this local content to around 60% – similar to other European countries such as France, Germany, Italy and Spain. Business Minister Matthew Hancock said: "The automotive sector is thriving and our supply chain firms are helping to create jobs and generate growth, but there is more to be done. That is why last month we announced £10 million of government money to address skills shortages in the auto supply chain to help UK companies win more contracts. "This news that there is an extra £2bn of sourcing opportunities for UK automotive suppliers – taking the total to £5bn – is great news for the UK economy." Another key finding in the report is that UK automotive suppliers are – in the main – confident about their future prospects. Of the companies surveyed, 80% expect their business to grow in the near-term. Dave Allen, purchasing director at Jaguar Land Rover and chair of the Automotive Council Supply Chain Group, said: "The current success of the UK automotive sector presents a renewed opportunity for automotive suppliers to invest in the UK and to increase local sourcing of the high value components that the UK's world-class vehicle makers require. "With this report we now have good visibility of the depth and value of the opportunity throughout the supply chain, together with deliverable actions to turn this opportunity into reality."