Car-makers give UK plc reason to cheer

UK car manufacturing bounced back sharply in 2010. But as China's US trip shows, our exporters have some way to go.

by James Taylor
Last Updated: 19 Aug 2013
Good news from the UK automotive industry: car production rose to 1.27m in 2010, a 27% jump on last year's figure - a clear sign that the industry is starting to recover from its recession-inflicted woes. But although this is a boost for UK exports - it allowed to us to send more than 1m vehicles overseas last year - the scale of our challenge has been thrown into stark relief by the deals emerging from the current Chinese state visit to the US. After all, China's spent over twice as much money with Boeing this week than it spent with all of our exporters put together in the whole of 2009...

In total, UK production was actually up to 1.39m in 2010, if you throw in commercial vehicles too. That's a big step up from the previous year - although unfortunately, it's still well down on the pre-recession figures (we made 1.75m vehicles in 2007, for instance). It's worth pointing out, of course, that we make most of these cars for companies based outside the UK - notably Honda, Nissan, BMW and Tata. But they still generate lots of British jobs, and ensure that the UK is a significant player in one of the world's biggest manufacturing industries. Overseas demand for our cars - and our engines, for that matter (the production of which was also up sharply) - remains strong.

When the Chinese deputy PM Li Keqiang was in the UK last week, the car industry was one of the biggest beneficiaries: a £1bn deal was announced by Jaguar Land Rover that will boost its sales to China by 40,000 vehicles, one of the biggest chunks of the £2.6bn in trade deals announced as a result of the visit. But in general terms, Britain has been slow to take advantage of China's extraordinary growth in recent times (only today it said its GDP rose by a remarkable 10.3% last year - how George Osborne would kill for a number like that). China gets less than 1% of its imports from the UK, and accounts for only 2% of our trade.

Developments in the US this week demonstrate the potential of this huge market: China has just agreed a trade deal worth $45bn (that's £28bn) with the US, including a $19bn acquisition of 200 Boeing aircraft. Since Britain exported about £5bn worth of goods to China in total in 2009, this shows how far we have to go.

Nevertheless, the car industry is one of our biggest manufacturing success stories these days. So it's good to see its engines starting to purr again.

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