President Trump’s tariffs will hurt, especially for our small-scale premium players MINI and JLR. Rising prices will likely make cost-sensitive US consumers turn to cheaper brands and “UK producers may have to review output in the face of constrained demand,” warns Mike Hawes, CEO of the Society of Motor Manufacturers and Traders.
“Over 25,000 jobs could be at risk as exports to America are predicted to fall, with UK employees at JLR and the Oxford MINI factory seen as among the most exposed,” warns the Institute for Public Policy Research think tank.
Aside from Nissan and Toyota, Britain’s mainstream car production has withered away because labour costs are higher, leaving the industry powered by luxury makers Bentley, McLaren, Aston Martin, Range Rover and Rolls-Royce, all backed by foreign owners. Given their brand cachet and price points, they have more scope to pass on the tariffs to US customers, but they too may face falling demand.
At the same time, they must answer fiendishly complex questions: how much of the powertrain mix is combustion, hybrid or electric? How are staff retrained and redeployed for the electric age? Is the supply base resilient and located in the right places to minimise tariffs and shipping costs?
The industry is pumping in billions, betting that the future is electric. The Government has pledged a £2billion Automotive Transformation Fund for capital-intensive projects.
Mike Hawes thinks the Government should go further to stimulate domestic demand for EVs: the SMMT calculates that halving VAT and eliminating the expensive car VED supplement on EVs (plus lowering public charging costs) would help put two million more on the road by 2028.
Countries that position themselves at the heart of the electric transformation are building for the future; China is a vivid example of that. My trips to Sunderland and Crewe show the UK can compete. The race is on – and it’s a race we can’t lose.
Will the UK’s car building industry grow in the future? Let us know your thoughts in the comments section…
