The automotive industry in the UK and Europe is under significant pressure, with recent closures, job losses, and production declines highlighting the challenges manufacturers face.
UK Car Production Decline
- Continuous Drop: October marked the eighth consecutive month of reduced UK car production, with a 15.3% year-on-year decline. This represents 14,037 fewer vehicles produced compared to October 2023, according to the Society of Motor Manufacturers and Traders (SMMT).
- Export Challenges: Vehicles produced for export, which account for 80% of UK car production, saw the largest decline at 17.6%. Half of these exports go to Europe, emphasizing the industry's reliance on overseas markets.
Plant Closures and Job Losses
- Ford and Vauxhall Cuts: Last week, 800 jobs were cut at Ford UK, and Vauxhall’s Luton plant was closed by its parent company Stellantis.
- Electric Vehicle (EV) Mandate Pressure: Stellantis cited the UK government's EV sales targets as a contributing factor to the closures. The mandate requires carmakers to ensure that zero-emission vehicles constitute 22% of all sales now, rising to 80% by 2030 and 100% by 2035. Current sales of EVs are lagging behind at just 18.7%.
Industry Concerns
- Financial Strain: Carmakers are facing potential fines of £1.8bn for missing EV sales targets. Additionally, £4bn in government subsidies to make EVs more affordable will end in April 2025, further increasing pressure.
- Review Announced: Following industry complaints, the government has announced a review of the EV sales mandate.
European Automotive Woes
The challenges are not isolated to the UK:
- Bosch Cuts: The world’s largest car parts supplier, Bosch, recently announced 5,500 job cuts, primarily in Germany.
- Volkswagen Factory Closures: Volkswagen plans to shut at least three factories in Germany, resulting in tens of thousands of layoffs.
Contributing Factors
- Economic Pressures: High borrowing costs and expensive raw materials are straining manufacturers.
- EV Market Weakness: Demand for EVs has been weaker than anticipated, leaving companies grappling with unsold inventory and growing competition from Chinese imports.
Outlook
The automotive industry faces an uphill battle to meet ambitious government mandates and adapt to changing market dynamics.
Without further support, more closures and job losses may follow, impacting not just manufacturers but also the broader economy.
Source: Sky news
Edited by: Evans Momodu
