UK car manufacturing has faced significant challenges in recent years, with production dropping to its lowest levels in decades due to the COVID-19 pandemic and the uncertainty surrounding Brexit. However, there are reasons for optimism in the industry.
According to the Society of Motor Manufacturers and Traders (SMMT), car production in the UK increased by 22.2% in the first quarter of 2023 compared to the same period in 2022. While this is still below pre-pandemic levels, it is a positive sign that the industry is beginning to recover.
There have also been major investments in the UK car manufacturing market recently. For example, Nissan announced in 2022 that it would invest £1 billion in its Sunderland plant to produce electric vehicles. This is a significant vote of confidence in the UK's ability to produce high-quality, innovative vehicles.
As car manufacturing in the UK continues to evolve, there are some emerging trends that are worth watching. One of the most significant is the rise of electric and hybrid vehicles.
The UK government has set a target of banning the sale of new petrol and diesel cars by 2030, which means that electric and hybrid vehicles will play an increasingly important role in the industry. UK car manufacturers such as Jaguar Land Rover and Nissan are investing in electric vehicle production, while startups such as Arrival and Fisker Inc. are also entering the market. Autonomous automotive innovations are charting a new frontier with startups such as FiveAI and Wayve working on autonomous vehicle development.
With an industry caught in the throes of arguably the biggest technological revolution in its history, Plimsoll is urging protagonists in the market to not lose sight of financial stability while competing in the innovation game. The latest Plimsoll Analysis allows business leaders to spot those companies that are pushing the boundaries of sound financial management in the gold rush of electrification and other innovation. Who is pushing the envelope too far?
The latest Plimsoll Analysis individually assesses the top 50 UK car manufacturers and shows a number of developing trends that should be of concern or excitement for business leaders throughout the auto industry:
Almost half of UK car companies are financially exposed
22 of the 50 companies included in the Plimsoll Analysis on UK Car Manufacturing are rated as Danger. This is an early warning that many of the country’s leading marques are carrying vulnerabilities in their financial performance. Should a deep recession hit the UK economy, these companies would struggle to reach the other side.
M&A deals now appear to be inevitable
With a growing polarisation between cash-rich businesses and undercapitalised rivals that need an injection of funds, a period of consolidation looks inevitable. The Plimsoll Analysis has named 16 of the UK’s 50 leading car companies as being ripe for takeover. How many of these companies will be bought by another UK company? Could there be further investment coming in from overseas?
Growth is returning to the market, but profits are falling
Year-on-year car sales are up 26% as supply constraints ease and consumers look to join the EV and hybrid sea change. This is welcome news for beleaguered car manufacturers in 2023. However, margins are not following suit. According to the latest Plimsoll Analysis margins remain wafer thin in the market at 1.4%. Are there too many manufacturers chasing too little market in 2023?
The latest Plimsoll Analysis is a valuable resource for car manufacturers, those working in the supply chain that feed into the market and anyone with a vested interest. Imagine the convenience of having every car manufacturer assessed, valued and rated on their financial strength in one convenient study.
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