Business Focus: British car makers do well as European market revives

UK car production is booming, bringing the sector ever closer to its all-time high in the 1970s, with some auto manufacturers in Britain planning further investment and growth.

In April 2014 car output in the UK stood at 133,437, more than a fifth higher than in April last year, with the growth being partly fuelled by the introduction of new models, according to the Society of Motor Manufacturers and Traders (SMMT).

At the premium end of the market, Bentley – owned by Volkswagen – recently announced plans to recruit more than 140 engineers and apprentices at its factory in Crewe, Cheshire. The influx will help the company develop new models including its first SUV (sport utility vehicle, or 4x4), as part of a previously announced £800m investment drive.

And Aston Martin says it will create 250 new jobs and extend its manufacturing plant at Gaydon, Warwickshire. Total investment is expected to be more than £500m and will come from its private equity owners.

Meanwhile, Jaguar Land Rover, which used to be a sister company of Aston within the Ford group, has been doing very well under the ownership of Tata Motors of India. JLR announced a 55 per cent rise in profits after tax to £1.9bn in the year to end-March, compared with the previous year. Revenues rose 23 per cent to £19.4bn in the same period.

The British subsidiary has done particularly well in emerging markets, with the result that it is building a factory in China, with vehicles expected to come off the production line early next year.

By contract, falling demand in Europe is forcing Japan’s Honda is to cut production at its UK plant in Swindon, Wiltshire. Around 500 jobs were reported to be under threat from the reduction in output.

Japanese rival Nissan, however, is doing well in the UK, with its Qashqai car produced at the Sunderland plant maintaining its position as Britain’s most produced model.

Europe, which accounts for about around half of new cars exported from the UK, is now seeing an upturn in demand following a period of economic doldrums, according to the SMMT.

Figures from the European Automobile Manufacturers’ Association show that registrations of new cars in Europe were up 4.6 per cent year-on-year in April 2014, making it the eighth consecutive month of rising demand. Britain saw an 8 per cent rise in sales, while Spain saw the biggest increase at 29 per cent.

So UK and European data suggests that the motor manufacturing in these markets is likely to enjoy a reasonably good 2014 – which is good news for the roughly three million people employed in the automotive sector in the EU, according to industry figures.