UK Government invests in automotive industry as Germany fears Brexit job cuts

11 January 2018

The UK Government has announced a deal with the automotive industry which will secure millions of pounds of investment.

The deal includes joint investment and long-term commitments in areas including the design and development of autonomous vehicles, research and development of battery technology and growing the manufacturing of hybrid and electric vehicles.

The government has put in £26.4 million (€30 million) which will be matched by the industry to total £52.8 million (€60 million).

Announcing the deal, Business and Energy Secretary Greg Clark said: ′For decades, the UK’s automotive industry has powered our economy forward. Today, automotive firms from around the world choose to set up shop here, citing our history of excellence, skilled workforce and world-leading supply chains.

′In the next ten years, the sector will see more change than in the previous hundred. From the engines that power our cars, to the way we control them and our attitudes to owning them, technology is changing what the industry looks like and where money can be made.’

The Sector Deal brings together a number of long-term joint commitments between government and industry that will help build and establish the UK’s leadership in meeting the Future of Mobility and Clean Growth Grand Challenges.

These include low-carbon automotive technologies through the Advanced Propulsion Centre; automotive research and development; transitioning to ultra-low and zero emission vehicles, in preparation for the country banning the sale of conventional engines in 2040; connected and autonomous vehicle technology development and supply chain competitiveness and productivity programme.

The deal also acknowledges that the UK automotive industry has benefitted from the European market and as the UK leaves the EU. A statement says that the industry welcomes the government’s ambition to achieve a new relationship that is free from tariffs and without friction to trade – factors that are fundamental to the competitiveness of the UK automotive sector.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), comments: ′We welcome today’s automotive sector deal which will help this vital UK industry meet some of the many global challenges it faces. The deal strengthens our long-standing partnership with government, with a boost to supply chain competitiveness and investment, matched by industry, to keep the UK at the forefront of electric, connected and autonomous vehicles.

′In its implementation, the deal must help the industry build on our success and seise the opportunities presented by such technological innovations. Given current uncertainties, it must also be complemented by ongoing efforts to maintain the right conditions for growth.’

Meanwhile, a study by accounting firm Deloitte has suggested that German suppliers could face thousands of job losses in the case of a ′hard Brexit’ involving tariffs and a lasting devaluation of the pound.

An arrangement where the UK gives up full access to the single market and customs union could threaten as many as 14,000 jobs at automotive suppliers in Germany and shrink their sales by €3.8 billion the study said. The country is the largest exporter of car parts to the UK, with companies such as Continental and Robert Bosch providing nearly a fifth of all components used in UK-based car production. Some 42,500 jobs in Germany depend on suppliers’ ties with the UK, and German suppliers generated €16.9 billion in sales in 2016 from UK car production.