As the Chancellor of the Exchequer considers the next Spending Round, the UK automotive industry has called for long-term strategic support to match the ambitions and priorities of the forthcoming Automotive Sector Industrial Strategy.

The news comes as it was announced UK car manufacturing had fallen 8.4 per cent in May to 129,355 vehicles – but it is still outperforming pre-recession levels. The weak demand in European markets has curbed car output. The SMMT said that while economic challenges abroad will impact on car output in the short-term, high-value investment by global automotive companies sets UK industry on course for prosperity in the long-term.

In its submission to the Treasury, the Society of Motor Manufacturers and Traders (SMMT) has challenged the Chancellor, Rt Hon George Osborne MP, to commit to long-term funding through the Regional Growth Fund (RGF) and the Advanced Manufacturing Supply Chain Initiative (AMSCI). 

Both funds have leveraged significant private sector investment throughout the UK automotive industry. A commitment to maintain the RGF and AMSCI initiatives as well as to continue their valuable support would provide the stability that businesses require to invest in the UK.

“The UK automotive industry is providing a significant boost to the UK economy, through strong new car sales, unprecedented levels of capital investment and rising manufacturing output,” explained Mike Baunton, SMMT Interim Chief Executive. “The drive to rebuild the UK automotive supply chain, increase automotive R&D, and bring innovative UK technologies to commercial maturity holds great potential for future economic growth and greater employment in UK automotive.

“To fulfil our potential and realise the short-term £3bn supply chain opportunity in the UK, automotive businesses and motorists need long-term continuity of government policy and support.

“The Chancellor has a unique opportunity to drive growth in a strategic sector for the UK economy, so it is vital that the forthcoming Spending Round supports our industry's growth potential through investment, innovation, low carbon vehicles and skills.”

In addition to securing RGF and AMSCI funding, SMMT suggests the Chancellor should focus and increase public spending on innovation and R&D in key strategic technologies. Highly fuel-efficient, low carbon technologies have major growth potential for global automotive companies as well as UK suppliers, SMEs and innovators. 

Ring-fencing and securing an increased share of existing innovation funding on the five strategic technology areas identified by the Automotive Council will help secure a greater share for the UK in global automotive R&D spend and innovation capabilities.

To support the early market for ultra-low emission vehicles (ULEVs), SMMT believes the Spending Round needs to deliver continued funding for the Plug-In Car and Van Grants. Commitment beyond 2015 is needed to ensure consumer and business confidence to buy and drive ULEVs. Since the Plug-In Car Grant was set-up in 2011, thousands of motorists have benefitted from the funding. 

But to achieve ambitious decarbonisation targets and deliver on air quality, consistent support for ULEVs through incentives and the taxation system is essential.

SMMT also urged the Chancellor to support the sector’s drive to increase its talent pipeline by continuing national support for skills and apprenticeships at all levels. This will help the industry address its urgent short-term gaps and boost the future prospects of the sector.

The UK automotive industry has worked hard in recent years to forge new partnerships with the UK's political decision makers and the creation of the Automotive Council marked a significant development in the relationship between the motor industry and government. 

Ensuring a more unified approach, the Council is the most comprehensive example of collaboration on this scale between industry and government. Operating through two distinct working groups – the Technology Group and the Supply Chain Group – the Automotive Council is already making good progress in plotting the course for UK automotive and promoting the value of the UK as a base for investment.