The UK automotive industry risks losing critical suppliers before they can secure future business, according to the Society of Motor Manufacturers and Traders (SMMT).
A new report, ‘from supply chain risk to industrial growth’, reveals how high costs, lower demand and programme uncertainty are weakening the businesses underpinning UK vehicle manufacturing.
Mike Hawes, SMMT Chief Executive, said: “Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible. Once their skills, tooling and expertise are gone, investment becomes harder to win – and far harder to bring back.
“The opportunity to reshore component spending in Britain is real, but we cannot take it for granted.
“Industry must improve productivity and work to secure critical capability, matched by government action on energy costs, market access and targeted investment support.”
The report identifies £6.4 billion in vehicle manufacturer spend by 2030 on priority components for UK supply, including significant opportunities to replace imports, if competitive conditions are secured.
SMMT emphasises the need for action to protect the skills, capability and capacity needed to secure UK vehicle investment.
Pressure is not just a result of the electric transition, it extends to manufacturers of essential parts used across all powertrains.
Unpredictable demand and high labour and energy costs are squeezing cash flow and limiting investment in equipment, skills and productivity.
The report shows some suppliers are operating at around half capacity in parts of their businesses.
SMMT is calling for a national Automotive Productivity Accelerator, building on DRIVE35-funded Supplier Readiness and Transformation pilots in the West Midlands and North East.
This would provide £100 million in capital grants for productivity, automation, robotics, AI and digitalisation, and £25 million for skills.
A £5 million match-funded Auto to Aerospace and Defence Readiness Programme would support diversification.
SMMT has said addressing energy, employment and business rates costs is ‘critical’, and continues to advocate for a workable ZEV Mandate and full UK participation in the EU’s ‘Made in Europe’ industrial policy.
