英國汽車貿易報告2023-英

UKAUTOMOTIVE

TRADEREPORT2023OPENROADSDrivingBritain’s

globalautomotivetradeCONTENTSUKAutomotiveisonCONTENTScoursetoreclaimitspositionasa￡100billion-plustradingpowerhousebytheendof2023,a?gurethat3468FOREWORDEXECUTIVE

SUMMARYRECOMMENDATIONSCHAPTER

1:UK

AUTOMOTIVE

TRADESNAPSHOTCovid-19cutbyaquarter162228CHAPTER

2:EV

FOCUS:FUTUREPROOFING

UKFTAsCHAPTER

3:ANEW

TRADE

POLICY

FORNEWSUPPLY

CHAINSCHAPTER

4:GLOBAL

AUTOMOTIVETRADE

AND

THE

ROLEOF

GLOBAL

BRITAIN40ANNEX2THESOCIETYOFMOTORMANUFACTURERSANDTRADERSFOREWORDFOREWORDTheautomotiveindustry’sabilitytonavigateunchartedterrainremainsundiminished:aglobaltowardselectri?cation–allinadditiontoBrexit,acost-of-livingcrisisandsoaringin?ation.Allwere,orare,massivechallengesthatwouldtestanyindustry,yetoursectorhasdemonstrateditsresilienceandpathwaytogrowth,growth?rmlydrivenbyglobaltrade.UKAutomotiveisoncoursetoreclaimitspositionasa￡100billion-plustradingpowerhousebytheendof2023,a?gurethatCovidcutbyaquarter.

Thisunderlinesthesigni?cantroleplayedbythesectoringeneratingemployment,fosteringgrowthandactingasasigni?cantcontributortothebroaderUKeconomy.Automotiverepresentednearly12%ofallBritain’smanufacturedgoodsinthe?rsthalfofthisyearandalmostoneineightUK-builtexports.Theseincludehighvalue,cutting-edgevehiclesshippedtoallcornersoftheworldfromgloballyrenownedbrands,partsandcomponentsfromcompaniessynonymouswithqualityandinnovationand,increasingly,newtechproductsdesignedtomeetchangingmobilityneeds.Inthispost-pandemicworld,theUKremainsagloballeaderinautomotiveproductionandexports,withanincreasingnumberofcars,vans,buses,trucks,taxis,specialistandeveno?-highwayvehiclestransitioningtowardszeroemissions.Withrecentsigni?cantinwardinvestment,theUK’s

expandingzeroemissionvehiclesupplychainisnotonlyadaptingtochangebutworkingtobecomeagloballeader.We

havecommittedtonetzeromobility,notjustasaresponsetoregulatorypressureorgovernmentcommitment,buttoprovideasustainablefuturefor

generationsahead.To

achievethisambitionwemusthavefreeandfairtradewithEuropeandotherestablishedandemergingmarketsworldwide.TheEUisourlargesttradingpartner–receivingalmost60%ofUKpassengervehicleexportsandsupplyingmorethan71%ofthecarsweimport.So?ndingasolutiontopreventtheimpositionoftari?sonelectricvehiclesandbatteriesassetbythecurrentEU-UKTradeandCooperationAgreementrulesoforiginisourmostpressingchallenge.Failuretodosorisksa￡4.3billionhittothesectoracrossEurope,which,ine?ect,willaddataxontheveryvehiclesneededfor

ustodecarboniseroadtransport.SafeguardingtradewiththeEUiscriticalbut,asthisreportsetsout,wemustremainfocusedontradearoundtheworld.Thismeansaddressingmanychallenges.Ensuringnewandrevisedfreetradeagreements,especiallywithIndia,SouthKorea,Canada,MexicoandtheGulfstates.Deliveringenhancedmarketaccessandworkableoriginrequirementsfor

EVs,

batteriesandrelatedcomponents.BuildingonrecentinvestmentwinstodevelopasustainablebatteryandcriticalmineralsupplychaininBritain.Improvingsupportfor

remanufacturingandrecycling.Enhancingregulatoryengagementwithkeytradingpartnerssooursmallvolumemanufacturersremaincompetitive.Andremainingalerttoanyadverseimpactsfromglobaltradetensions.Solvethatpuzzleandthebene?tsaretremendous–jobs,growthandprosperityacrosstheUK.Committingtofreeandfairtradeishowwewillspurinvestment,sustaincompetitivenessanddeliverzeroemissionproductsthataddresstheglobalchallengeofclimatechange.MikeHawesChiefExecutiveTheSocietyofMotorManufacturersandTraders(SMMT)THESOCIETYOFMOTORMANUFACTURERSANDTRADERS32022

HIGHLIGHTSUK

AUTOMOTIVETRADE:

￡94bnUKCAREXPORTSBY

DESTINATIONEURestoftheworldOtherEuropeNorthEastCarexports:70%NorthWestCarexports:80%WalesCarexports:87%EastMidlandsCarexports:82%WestMidlandsCarexports:84%EastCarexports:65%SouthEastCarexports:82%4THESOCIETYOFMOTORMANUFACTURERSANDTRADERSEXECUTIVE

SUMMARY￡34.4TOP10CAREXPORTDESTINATIONS2022EV

TRADEbillionValue

ofexportsEU57.6%13.3%8.7%2.9%2.0%1.9%1.4%1.3%0.6%0.4%9.9%USAExportsofEVs

toEU￡5.6bnChinaJapanSouthKoreaAustraliaTurkeyCanadaMexicoUAEAutomotivemakesup11.8%ofallUKmanufacturedgoodsexportsOtherImportsofEVs

fromEU￡9.7bn￡59.4TOP9CARIMPORTORIGINS

2022billionValue

ofimportsEU71.3%9.2%5.8%5.8%3.6%1.4%1.3%0.9%0.7%ChinaSouthKoreaJapanEV

RULES

OFTurkeyMexicoSouthAfricaUSAORIGIN

IMPACT￡3,400MoroccoNew?guresrevealtari?threattoEU-madeElectricVehiclescouldresultina￡3,400averagepricehikeifunworkablerulesoforiginareimplementedinJanuary71%ofimportedcarstotheUKcomefromtheEU￡3,60010%tari?swouldalsoadd￡3,600tocostofBritish-builtEVs

soldinEurope,withconventionalICEmodelsuna?ectedonbothsides.30%

97%Electri?edvehicleAlmost97%ofnewbatteryelectricvehicle(BEV)exportsupalmost30%inthe?rsthalfof2023(vs2019)registrationswereimportedvehiclesinthe?rsthalfof2023THESOCIETYOFMOTORMANUFACTURERSANDTRADERS5RECOMMENDATIONSRECOMMENDATIONS

FORGOVERNMENT

AND

INDUSTRY01

TCA

ORIGIN

REQUIREMENTSFOR

BATTERIES05

INTERNATIONALCIRCULARECONOMYSupportthecirculareconomybystreamliningthetari?suspensionmechanismanddeviseatailor-madestrategytoreducecostsofTheUKandtheEUshouldagreeurgentlytodelaytheintroductionoftougherbatteryrulesforthreeyears.internationalsourcingofmaterialsneededbyremanufacturersandrecyclingcompanies.02

ACHIEVEFTAs

FITFOREVsEnsurenewandrevisedFTAs

deliverenhancedmarketaccessandworkableoriginrequirementsforEVs,batteriesandrelatedcomponents.06

ENGAGEWITHCHINAMonitorpotentialadverseimpactsontheUKautomotiveindustryfromtheEU’sinvestigationintoChineseEVsubsidies.UKmanufacturersshouldsupportengagementwithChinabyprovidingmeaningfulinsightsintomarketchallenges.Enhancedbilateraldialoguecouldhelpaddressmarketaccessbarriers.03

INCREASEUKVALUE-ADDEDDeviseanationaladvancedmanufacturingplantoattractadditionalinvestmentthroughoutthebatterysupplychainandensuretheautomotivesectorcanfullybene?tfromallUKFTAs.07

OPENROADSTO

INDIAStep-upengagementtoreachabalanced,commerciallymeaningfulagreementwithIndiaprovidingadditionalmarketaccessacrossallautomotiveproductsonthebasisofworkableoriginrequirements.04

CRITICALMINERALSNETWORKAgreenewcriticalmineralspartnershipswithresource-richcountriesandmajorEVcommitmentstoencourageinvestmentandenhancesupplychainreliability.6THESOCIETYOFMOTORMANUFACTURERSANDTRADERSRECOMMENDATIONS08

TRADECONTINUITY11

TRADEWITHTHEGULFWITHSOUTHKOREAFinalisinganambitiousnewFTA

withGCCcountriescouldopencommerciallymeaningfulopportunitiesifthepartiesagreeonenhancedmarketaccesscommitments.Launch,negotiate,?naliseandbringintoe?ectamodernisedUK-SouthKoreaFreeTradeAgreementbeforetheexpiryoftheextendedEUcumulationclause.09

COOPERATE

TO

ADDRESSCARBONLEAKAGE12

BUILDONTHEATLANTIC

DECLARATIONFinalisenegotiationsofaUS-UKcriticalmineralpartnershiptoimprovemarketaccessintheUSforcriticalmineralsextracted,re?nedorrecycledintheUK.WiththeUKandseveralothercountriesalreadyimplementingEmissionTradingSchemesandconsideringtheimplementationofCBAMssimilartotheEU’s,

Europeanautomotivebusinessesmightbene?tgreatlyfromtherecognitionofequivalentregulatoryregimesandthereductionofadministrativeburdensandadditionalcostsinmovementsofcoveredproductsbetweenthem.13

REFORGETRADETIESINNORTHAMERICAConcludethenegotiationofupgradedFTAs

withMexicoandCanadaandsecureanextensionofexistingEUcumulationclausestoensuretradecontinuityuntilthenewagreementstakee?ect.10

DEVELOPASUSTAINABLESUPPLY

CHAINEUregulationsoncorporatesustainabilityarelikelytosetanewglobalbenchmark.ItisessentialforautomotivebusinessesoperatingintheUKandinthebroaderEuropeanregiontofamiliarisewithnewandupcomingobligationsandputinplacethenecessarycompliancemechanisms.14

GOTO

BAT

FORICONICBRITISHBRANDSEnhanceregulatoryengagementwithkeytradingpartnerstoseekadditional?exibilitiesforSVMsandmitigateagainstimpactsofoverburdensomeregulatoryandbehind-the-borderbarriers.THESOCIETYOFMOTORMANUFACTURERSANDTRADERS7CHAPTER

1UK

AUTOMOTIVETRADE

SNAPSHOT→UKAutomotivedelivered￡94billionintradein2022,withthesectoreyeingthepossibilityofregainingitsstatusasa￡100billionplustradehubbytheendof2023.→TheAutomotivesectorremainspivotaltotheUK’s

economy,

representing11.8%ofallexportsofUKmanufacturedgoodsinthe?rstsixmonthsof2023androadvehiclestoppingthelistofthecountry’s

mostimportedcommodities.→Theindustryremainsopentotheworld,withtheEUconsolidatingitspositionasthesector’s

largesttradingpartnerreceivingalmost60%ofUKcarexportsandsupplyingmorethan71%ofimportednewcars.TOTAL

AUTOMOTIVETRADEDespitebeingseverelytestedbyyearsofextraordinaryeconomicturbulenceandsystemicdisruptions,theUKautomotivesectorremainsamulti-billionpoundtradehub,demonstratedbyitsabilitytodeliver￡94billionintradevalueattheendof2022–ayearmarredbythefall-outofmultipleglobalandregionalcrises.Mostimportantly,withimportsandexportsof?nishedvehicles,partsandcomponentsworthsome￡101billionintradeinthe?rsthalfof2023(onarollingyearbasis),theUKautomotiveindustryseemsfullyontracktoregainitspre-pandemicroleasa￡100billionplustradegeneratorbytheendoftheyear.UKAutomotiveaspiringtoreclaimitspositionasoneofBritain’smostvaluedtradehubs,justthreeyearsfromtheCovid-19pandemic,isatestamenttothestrongfundamentalsofthesector.

Thisincludestheabilityofdomesticmanufacturersandimporterstoadjusttheirbusinessoperationsinthefaceofadverseconditions,ongoingsupplychainissuesandthedeterminationtoremainanopenmarketdespitegrowinginternationalcompetition.8THESOCIETYOFMOTORMANUFACTURERSANDTRADERSCHAPTER

1Duringthe2020-2022period,unexpectedchallengeshavehinderedtheindustry’exportvaluesfacingthemostsigni?cantimpacts.ThesechallengescausedmajordisruptionstotheUKautomotiveindustry’scost-sensitivebusinessmodelandcouldhaveresultedinthesystemicmarginalisationofthesectorasasigni?cantcontributortotheUK’s

tradebalancesheet.Whilelastyear’soveralltradeperformancewasdrivenbythestrongreboundinautomotiveimportvalues,exportsstruggledtorecovertopre-pandemiclevels.ThepandemicandtheconsequentiallockdownsresultedinwidespreadmarketclosurecausingproductiontohaltintheUKalongsideothermanagedriskapproach,thankstothevaccinationprogrammerolloutworldwide,theexpectationsofastrongreboundinsalesandproductionwerefrustratedbysupplyshortages–mostnotablyofsemiconductorsandotherrawmaterials,aswellassystemicsta?shortages.However,

evenin2022,whenin?ationarypressureandtheuniquemarketconditionspushedexportsofbasicpreciousmetalstomorethandoubleinoneyear,

UKautomotiveexportscoveredalmost10%ofallexportedmanufacturedgoods.Inthe?rsthalfof2023,theshareofUKautomotiveexportshasincreasedto11.8%,bringingtheindustryastepclosertothe13%thresholdrecordedbeforethepandemicoutbreak.Furthermore,theintroductionofnewtradebarriersinexchangesbetweentheUKandEUfollowingtheUK’s

exitfromtheEuropeanSingleMarketandCustomsUnionin2021hasimpactedthishighlyintegratedautomotivesupplychain.Morerecently,thefull-scaleinvasionofUkrainelaunchedbyRussiainFebruary2022furtherexacerbatedproductionchallenges,asexempli?edbyUkrainianwireharnesssuppliersforcedtostopmanufacturingoperationsovernightandmajorshortagesofUkrainianneongas–acrucialcommodityintheproductionofchips.Theimpactofsanctionsadoptedinresponsetotheaggression,coupledwithskyrocketingpricesforenergyandkeymanufacturinginputs,suchaspalladiumandaluminium,fuelledthemostsigni?cantin?ationarycrisisindecades,withtheUKamongthehardesthit.Chart1

Total

automotivetradevalue(Motorvehicles,Chart2

AutomotiveshareofallUKtrailers&semi-trailers,parts&components)manufacturedgoodexports(%)ImportsExportsTotalSource:ONSSource:ONSBillions2019202020212022H12023(RY)2019202020212022H12023(RY)120100801512913%11.8%11.2%10.9%9.7%606403200THESOCIETYOFMOTORMANUFACTURERSANDTRADERS9CHAPTER

1Chart3

TOP

5UKGoodsexportsStandardinternationaltradeclassi?cation(SITC)20212022H12023Source:HMRCBillions0102030405060Goldnon-monetary23.4(excludingoresandconcentrates)59.730.4Roadvehicles(includingaircushionvehicles)18.818.531.828.4Powergeneratingmachineryandequipment31.123.4Petroleum,petroleumproductsandrelatedmaterials15.437.823.424.0Medicinalandpharmaceuticalproducts11..520.2EXPORTSOFFINISHEDVEHICLESChart4

UKvehicleproduction(rollingyearbasis)turbulence,roadvehiclesareslowlyregainingtheirtraditionalpositionastheUK’s

mostexportedcommodity.CarexportsCVexportsVehicleproduction%carsexported%CVsexportedSource:SMMTIn2022,theenergycrisisandin?ationarypressureonenergyproductsledtoaboominexportvaluesofpetroleumandrelatedproducts,whiletheexceptionalperformanceofgoldexportsappearstobe

aresponsefromglobalinvestorstothegeopoliticalandeconomiccrisisthatunfofUkraine.Despitetwoyearsofsteadygrowthinexportvalues,itisnosurprisethatroadvehiclesbecametheUK’s

thirdmostexportedgoodattheendof2022,withavalueof￡31.8billion.Jan‘16Jan‘17Jan‘18Jan‘19Jan‘20Jan‘21Jan‘22Jan‘23Millions%2.0851.81.61.41.21.00.80.60.40.2080757065605550Asmarketsadjusttotheneweconomicenvironment,exportsofgoldareprogressivelynormalisingandtherearesignsthatmotorvehicleexportshaveregainedmomentuminthe?rsthalfof2023,withavalueofmorethan￡18.8billion,justbelowgoldexports,andthepossibilitytoreturntopre-pandemiclevelsbytheendoftheyear,

ifcurrenttrendsaremaintained.10THESOCIETYOFMOTORMANUFACTURERSANDTRADERSCHAPTER

1Chart5

Top

10carexportdestinationbyvolumeAlthoughvaluesareoncoursetoregaintheirpre-pandemiclevel,exportvolumesremainfarbelowtheonemillionunitthresholdrecorded,forthelasttime,inApril2020.20192021202220231HSource:SMMTAttheendof2022,justover600,000carswereshippedgloballyfromtheUK.Inthe?rsthalfof2023,theindustryhadreporteda7%increaseto650,000exportedunitsonarollingyearbasis.Despitethelatestpositiveperformance,fullrecoveryremainselusive,withexportvolumesin2023(onarollingyearbasis)remaining-38.4%below2019levels.Furthermore,thelossinexportvolumessince2020wasnotcompensatedbyadditionalsalesforthedomesticmarket,asthesectorremains?rmlyexport-oriented,withalmosteightoutof10carsproducedintheUKsoldtocustomersoverseas.10%20%30%40%50%60%12345678EUUSAChinaJapanSupplychaindisruptions,systemicshortagesandbroaderin?ationaryimpactscanpartiallyexplainthedisconnectbetweenexportvaluesandvolumes.However,

themajordi?erenceingrowthrates–withexportvaluesincreasingby34%andexportvolumesupbyjust7%inthe?rsthalfof2023–pointstoastructuralchangefollowingthelossofHondaandVauxhallAstramodelsandtheensuingreductioninexportsfromvolumemanufactures.Manufacturersarelikelyseekinghigherpro?tabilityandareadjustingtothedi?erentcoststructuresofloweremissionvehicles,withvehicleassemblersincorporatinghigh-valuebatteries–includingassociatedpartsandcriticalmineralsAustraliaTurkeySouth

KoreaCanadaUAE910–andadvancedtechnologiesintotheir?nishedproducts.MexicoTheworld’sfourlargesteconomieshavebeenconsistentlyrankedasthetopexportdestinationsforUK-builtpassengercars.Althoughtheindustryexportstoallcornersoftheworld,thefourbiggestmarkets–namelytheEU,theUS,ChinaandJapan–haveacumulativeshareofalmost80%ofallUKcarexports.Chart6

UKcarexportsbytype(volume)VolumePremiumSmallVolume(right-handaxis)Source:SMMTAmongthebigfour,

theEUisconsolidatingitsdominantposition,with59.5%ofallexportedUKcarsshippedtotheblocinthe?rsthalfoftheyear(versus57.6%in2022and54.8%in2019).Honda’s

decisiontodiscontinueproductionintheUKresultedinamajordeclineinexportstotheUSandtheprogressivegrowthintherelativeweightofexportsdestinedfortheEUandothermarkets,withtherelativeweightofexportvolumestotheUSfallingfrom18.9%in2019to9.5%inthe?rsthalfof2023.WiththeexceptionoftheUSandCanada,allotherexportdestinationsinthetop10recordedanincreaseintheirrelativeweightcomparedto2019.China(7.4%),Japan(3.5%),Australia(2.9%),Turkey(2.7%),SouthKorea(1.8%)andCanada(1.3%)maintainedtheirspotsinthetop10,whiletheUAE(0.8%)andMexico(0.8%)arenotablenewentries,withSwitzerlandandSouthAfricadroppingoutofthelistinthe?rsthalfoftheyear.201920202021202260030252015500400300Thedeclineinexportunitsisdrivenmainlybythereductioninexportsofvolumemanufacturers,notingtheabovestructuralissues.Premiumvehiclemanufacturersrecordeda

slightdip,whileexportsfromsmallvolumemanufacturers(SVMs),traditionallyhigh-valueluxuryandsportsvehicles,havefullyrecoveredsince2021.Thesechangescontributedtothedivergingpatternsbetweenexportvaluesandvolumes.20010ThousandsThousandsTHESOCIETYOFMOTORMANUFACTURERSANDTRADERS11CHAPTER

1TheUKautomotivesectorremainsamulti-billionpoundtradehub,demonstratedbyitsabilitytodeliver￡94billionintradevalueattheendof2022TheUKautomotiveindustryisavitalpartoftheUKeconomy,withadomesticpresenceinregionsacrossthecountryandanexportfootprintspanningtheglobe.AllUKregionshostingcarassemblyoperationsarestronglyexport-oriented.Thepercentageofcarsproducedforexportsineachindividualregionrangesfromaminimumof65%intheEastofEnglandtopeaksof84%intheWestMidlandsand87%inWales.AnexceptiontothesluggishexportvolumetrendisthestrongreboundinshipmentsofBritish-builtcommercialvehicles(CVs).Bytheendof2022,theUKwasexportingalmost40%moreCVs

thanin2019,withmorethansixoutof10destinedforoverseasmarketsandmorethan66,000CVs

exportedinthe?rsthalfof2023(onarollingyearbasis).TheUKCVindustrybene?tsfromtherapidexpansiondomesticCVmanufacturerswellpositionedtocapturemarketgrowth.However,

withmorethan90%ofCVexportsdestinedfortheEU,thismarketsegmentremainshighlydependentonsinglemarketdemandcycles.Thediversi?cationoftheCVexportportfoliomightrepresentanopportunitytoconsolidatethesector’sexportoutlookandcreateeconomiesofscale.Chart7CVexports-destinations(shareallexports)20231HEUOceaniaAmericaAsiaOthersOther

EuropeAfrica%100806040200Table

1Shareofcarproductionfor

exportsfromeachregionNorthEast(England)NorthWest(England)YorkshireandTheHumber(England)EastMidlands(England)WestMidlands(England)EastofEngland70%80%n/a82%84%65%n/aLondonSouthEast(England)SouthWest(England)Wales82%n/a87%n/aSource:SMMTScotland12THESOCIETYOFMOTORMANUFACTURERSANDTRADERSCHAPTER

1IMPORTSOFFINISHEDVEHICLESTheUKlightcommercialvehicle(LCV)marketisalsodominatedbyTheUKremainsanopenmarket,withimportedcarscoveringmorethan90%ofallnewcarregistrationsinthe?rsthalfof2023andvolumesincreasingtoabove1.6millionunitsonarollingyearbasis.AccordingtoHMRC,roadvehiclesconsistentlytopthelistofthemostimportedcommoditiesbyvalue,withinboundshipmentsworthmorethan￡58.5billionlastyear,

aheadofpetroleumproductsandgas.imports,withtheirshareconsistentlyexceedinga90%marketsharesince2016.ImportedLCVs

arepredominantlysourcedfromtheEU(63.7%),however,

Turkeycovers23.2%ofallLCVimportsandremainsamajorvansupplierwithcloselinkstoboththeUKsupplychainandBritishcustomers.TheUKreceivesnewcarsfromninedi?erenttradingpartners,withtheEUbeingourlargestsuppliercovering71.3%ofallimports.Chinese-builtcarshaveseentheirmarketshareincreasefromlessthan1%in2019toaccountfor9.2%ofallimportsinthe?rsthalfof2023–aconsequenceoftherisingelectri?cationoftheUK’s

newcarmarket.OtherAsiannationsarealsoperformingwellintheUK,notablySouthKoreaandJapanroundingoutthetopfourimporters.Chart8

UKnewcarregistrations-importsvolumeChart9

Top

9carimportsorigin(shareoftotal)andshareImportTotalImportsshareSource:SMMT2019202120221H2023Source:SMMT10%

20%

30%

40%

50%

60%

70%

80%2019202020212022H12023(RY)123456789EU%2.52.01.51.00.5091908988878685ChinaSouthKoreaJapanTurkeySouthAfricaMexicoUSAMoroccoChart10

UKnewLCV

registrations-importsvolumeChart11Top

7LCV

importsorigin(shareoftotal)andshareImportTotalImportsshareSource:SMMT202120221H2023Source:SMMT10%20%30%40%50%60%70%2019202020212022H12023(RY)1234567EUThousands40035030025020015010050979695949392919089TurkeySouthAfricaThailandChinaSouthKoreaJapan0THESOCIETYOFMOTORMANUFACTURERSANDTRADERS13CHAPTER

1TRADEINENGINESANDPARTSIn2022,thecumulativevalueoftradeintypicalpartsandenginesamountedtomorethan￡17.2billion.Lastyear,

theUKturnedoutmorethan1.6millionengines,with57.8%ofallunitsexportedoverseas.Engineproductionandexportvolumeshave?atlinedinthe?rsthalfof2023,remainingbelowthetraditionalpre-pandemiclevelofmorethan2millionunitsmanufacturedonarollingyearbasis.Engineexportsremainasigni?cantcontributortotheUK’s

economy,withshipmentsoverseasvaluedatmorethan￡2.1billionin2022.However,followingyearsofdecline,engineimportsareacceleratingatafasterpacethanexports,withinboundshipmentsworthmorethan￡1billionin2022–drivenbya45.5%annualincreaseinimportsfromtheEU.Similartoengines,tradeincomponentshasnotyetfullyrecovered.In2022,importsandexportsoftypicalpartsandaccessoriesremainedbelowpre-pandemiclevels,despitea7.5%annualincrease,toatotalvalueofmorethan￡14billion.TheUKsupplychainremainsdeeplyintegratedwithitsclosestneighbours,astheEUmaintaineditspositionastheUKautomotiveindustry’sdominantsupplierandmainexportdestinationforBritishparts.Tcomparedwithtradetotherestoftheworldin2021.However,

exportsfromtheUKtonon-EUmarketswerealreadyabovepre-pandemiclevelsin2022,andtradeinpartswiththerestoftheworldisoncoursetofullyrecoverbytheendof2023,whileareturnto2019valuesintradewiththeEUisunlikely.Chart12

UKengineproduction(rollingyearbasis)ExportsTotalShareSource:SMMTJan‘16Jan‘17Jan‘18Jan‘19Jan‘20Jan‘21Jan‘22Jan‘23Millions%3.0662.52.01.51.00.5064626058565414THESOCIETYOFMOTORMANUFACTURERSANDTRADERSCHAPTER

1Engineexportsremainasigni?cantcontributortotheUK’s

economy,

withshipmentsoverseasvaluedmorethan￡2.1billionin2022Chart13

Total

enginetrade(value)Chart14

Total

tradeofpartsandcomponents(value)ExportsImportsTotalSource:HMRCExportsImportsTotalSource:HMRC2019202020212022H120232019202020212022RYBillionsBillions4500350030002500200015001000500201816141210864200Chart15

Trade

inparts-EUvsROW(Value)EUexportsEUimportsTotalEUROW

exportsROWimportsTotalROWSource:HMRC2019202020212022H12023BillionHESOCIETYOFMOTORMANUFACTURERSANDTRADERS15CHAPTER

2EV

FOCUS:FUTUREPROOFINGUK

FTAs→Trade

inelectri?edvehicles(EVs)

drivethesector’srecovery,

withexportsofbatteryelectricandhybridvehiclesalready30%abovepre-pandemiclevels.ImportsofEVs

fromtheEUandtherestoftheworldarecrucialtosupporttheUK’senvironmentalambitions.→The

EU-UK

TCA

has

createdan

enabling

environment,

withthe

value

of

bilateral

EV

tradegrowing

more

than

104%

inthree

years,

from

￡7.4

billionat

the

end

of

2020

to

￡15.3billion

last

year.

However,

thephase-in

of

unworkable

originrequirements

for

batteries

in2024

risks

derailing

regionalEV

trade,

witha

potentialtari?

bill

of

￡4.3

billion.→Athree-yeardelayoftheTCAbatteryoriginrequirements,themodernisationofcontinuityagreements,thenegotiationofnewFTAssettingrealisticcontentrequirementsandadditionalinvestmentthroughoutthebatterysupplychainarecrucialtoscaleupinternationalEVtrade.16THESOCIETYOFMOTORMANUFACTURERSANDTRADERSCHAPTER

2TRADEINEVsChart16UK‘electri?ed’carproductionfor

exportAssupplychainbottlenecksease,globaltradeshouldfuelgrowthinUKautomotiveproduction,boostingsalesofbothBritish-madeandimportedautomotiveproducts,andencouragingthetransitiontolow-emissiontechnologiesbybuildingeconomiesofscale.BEVvolHybridvolExportshare(allelectri?ed)Source:SMMT2016

2017

2018

2019