The national industry grapples with Brexit and increased motorization
In light of ongoing Brexit-related woes in the manufacturing sector, it seems unlikely that the UK vehicle manufacturing sector will recover soon. Once the largest exporter of cars in the world, automobile brands originating in the UK still hold prestige worldwide, even if foreign companies currently own many of these brands. In terms of sales, German brands were among the best-selling passenger car companies in 2022, with Volkswagen holding close to 8.2 percent of the market while Audi and BMW also ranked in the top five.The automotive market in the country thus depends on foreign car brands to drive its automobile market. Despite this reliance on external factors, employment did not slow down in the UK manufacturing industry, which was responsible for approximately 182,000 jobs in the country in 2022. Investment in inland transport infrastructure in the UK had also been growing before the pandemic. Most of this infrastructure spending and employment was generated to meet the growing transportation needs of the population, which bounced back to its pre-pandemic motorization rate in 2021. This market development adds to the external pressures faced by the industry.
New developments rattle the industry
The United Kingdom was among the largest markets for passenger car sales in Europe in 2022. While country-specific factors have impacted the industry, they are paired with the slow recovery of the global automotive industry, as inflation and supply issues rattled the global market. The United Kingdom’s passenger car exports dropped between 2019 and 2022, despite demand from its main trade partner, the European Union, increasing between 2021 and 2022. This drop in exports contributed to the decrease in the motor industry’s economic contribution to the United Kingdom, dropping by 4.5 billion British pounds between 2019 and 2021. The UK’s motor vehicles trade sector reported a negative trade balance in 2022 as imports recovered from the drop recorded during the COVID-19 pandemic.To face the oncoming challenges, consumers' interest in used cars is growing. In April 2022, over 30 percent of UK consumers reported they further intended to buy a cheaper car as a result of the general cost of living increase, while some 27.3 percent reported the crisis would have no influence on their purchase. Electric vehicles, following a growing international trend, are also gaining popularity among consumers and manufacturers in the United Kingdom and have helped boost monthly sales in the country in 2023. These factors suggest a slow shift within the UK's automotive industry.