The National Industry Grapples with Brexit and Increased Motorization
In light of ongoing Brexit-related woes in the manufacturing sector, it seems unlikely that the UK vehicle manufacturing sector will recover soon. Once the largest exporter of cars in the world, automobile brands originating in the UK still hold prestige worldwide, even if foreign companies currently own many of these brands. In terms of sales, German brands were the best-selling passenger car companies in 2021, with Volkswagen holding close to nine percent of the market, followed by Audi and BMW.The automotive market in the country thus depends on foreign car brands to drive its automobile market. Despite this reliance on external factors, employment did not slow down in the UK manufacturing industry, which was responsible for approximately 182,000 jobs in the country in 2021. Investment in inland transport infrastructure in the UK has also been steadily growing. Most of this infrastructure spending and employment was generated to meet the growing transportation needs of the population, which is becoming increasingly motorized. This market development adds to the external pressures faced by the industry.
New External Developments Rattle the Industry
The United Kingdom was among the largest markets for passenger car sales in Europe in 2021. While country-specific factors have impacted the industry, they are paired with a general European car sales decline. The United Kingdom’s passenger car exports dropped between 2019 and 2021 as demand from its main trade partner declined. This drop in exports contributed to the decrease in the motor industry’s economic contribution to the United Kingdom, dropping by 4.5 billion British pounds between 2019 and 2021.Before the pandemic, the UK’s motor vehicles trade sector reported a negative trade balance. This changed in 2020, partly due to a market demand drop and an increased consumer price index. This import slump affected other countries and regions as well. The European Union’s car imports from the UK dropped by over 18 percent between 2020 and 2021, down to 7.6 billion euros. United States’ motor vehicle imports—2.14 percent of which came from the UK—were also brought down by the pandemic. The UK automotive industry is therefore facing both country-specific challenges and the same slump as the global automotive industry.
