The UK automotive industry hopes Chancellor Rachel Reeves’ Budget will help create the conditions needed to restore the sector to a 1.3 million vehicle manufacturing hub by 2035.
The Society of Motor Manufacturers and Traders (SMMT) has warned that current industrial measures and funding pledged in support of the sector’s growth would be undermined by fiscal policies that threaten the UK’s new car market.
Mike Hawes, SMMT Chief Executive, said, “Government has said it will back automotive to the hilt and, for the most part, deeds have matched words with trade agreements, regulatory flexibilities and an Industrial Strategy supplemented by a £2.5 billion fund that is designed to support automotive as a growth sector.
“But with the good also came the bad and the downright ugly, with the proposed ending of Employee Car Ownership schemes. The Budget this week is a chance to align fiscal measures to growth and the future success of the sector.
“Rather than road pricing for EVs, we need to see measures that stimulate consumer demand, so we can deliver the tax revenues, jobs, investment, productivity and growth that is in everyone’s interests.”
Singling out EVs for a new pay per mile tax would suppress demand while no mitigation measures, including additional grant funding, could offset the message this measure would send consumers.
The SMMT is concerned measures that further weaken demand will shrink the market and deter investors.
Mick Flanagan, SMMT President, said, “I believe 2025 will be seen as an inflection point for our industry. The years of globalisation seem to be at an end, and as political sands shift, trade barriers go up and global competitors seek new footholds, we need a partnership with government to create the right conditions to help us succeed.
“Every vehicle maker and supplier has invested heavily to create a pipeline full of EV programmes, however, the demand is still not there, the charging infrastructure is not there – and yet the ZEV mandate still demands we sell these vehicles.
“We are at a tipping point in our electrification journey – what we choose to do now will shape our future radically.”
