The Society of Motor Manufacturers and Traders (SMMT) said today that a relocation of car manufacturing to the UK would be “good news” for the sector.
“If supply chain resilience offers the opportunity to relocate more of the supply chain to the UK, we will certainly support and encourage that,” SMMT chief executive Mike Hawes told AFP. City AM.
Automakers have started moving production out of Eastern Europe following Russia’s decision to invade Ukraine and a series of sanctions imposed on Moscow.
According to Hawes, a successful relocation of car production to Britain depends on the existence of a strong and healthy car production as well as the level of competitiveness.
“Being competitive means making the right products that are in demand and being able to make them as cheaply as possible, but with high levels of quality and flexibility,” he added.
The chief executive explained that the UK has structural disadvantages that put its competitiveness behind that of other countries.
Although they managed to secure a free trade agreement with the EU, the impact of Brexit on administrative and logistical problems added a cost that European factories do not face.
“The larger issue is that if you have additional costs as a result of trade, you need to compensate by reducing costs elsewhere,” Hawes said.
Following the recent spike in fuel prices, energy costs have become the biggest hurdle for the UK automotive industry.
“Our energy prices were already more expensive than the rest of Europe,” explained the managing director. “So this price volatility is making that gap worse.”
Hours before the chancellor presented the spring budget, the SMMT called on the government to focus on cutting energy costs to ensure industry could become competitive again.
“We wanted to see more of that, so maybe that would come later in the year with the budget and we would look forward to that because it’s needed.”