What’s hurting UK car industry and why the pain may last

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By Amit

The British automotive industry is passing through an extremely challenging phase and experts have urged for a strong focus on building a competitive edge to take on clear and present obstacles. Much like the case in most of western Europe, the UK also is concerned about the US Inflation Reduction Act (IRA) which allows subsidies on electric vehicles manufactured in the US.

HT Auto Desk

Updated on:
24 Feb 2023, 10:09 AM

File photo used for representational purpose. (AFP)

Both production and demand for vehicles in the British market has been rather lukewarm in recent times. Production of cars in January, for instance, fell by 0.3 per cent to 68,575 units. Of this, electric, plug-in hybrid and hybrid electric combined to account for 28,329. Data from Society of Motor Manufacturers and Traders showed that around 775,000 cars were manufactured in all of 2022, down by 10 per cent from the year before. Most of the blame is pinned on the shortage of crucial components, most of which comes from China.

But it is the US Inflation Reduction Act that could potentially increase anxiety levels. “Recent global developments … suggest increasing protectionism which, if not challenged or mitigated, could put the UK at a disadvantage,” Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, was quoted as saying by Reuters. “Automotive manufacturing can drive long-term growth for the low carbon economy but the sector needs competitive conditions to attract investment.”

Hawes was referring to the US Inflation Reduction Act which, among other factors, aims to promote clean energy and offer subsidies on electric and new-energy vehicles manufactured locally. The string of subsidies on offer on such vehicles will make it more affordable for Americans to buy the products. But this also means manufactures who do not manufacture such vehicles in the US are in a position to lose out against those who do. Hyundai, for instance, has already had to rework strategy to allow for its EVs to be made in the US so that it does not lose out to rivals like Tesla and GM. The concern across the Atlantic though is that it would take away focus from production units on the old continent.

(With inputs from agencies)

First Published Date: 24 Feb 2023, 10:09 AM IST

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