Sanjoy Sen is a chemical engineer. He contested Alyn and Deeside in the 2019 general election.
The British car industry is facing challenging times. Last year, output fell below 800,000, although we are seeing recent signs of recovery; manufacturers have exited (Honda) or are threatening to (Stellantis-Vauxhall).
Whilst theories abound as to the cause, from Brexit to Covid to Net Zero, there are also several major challenges confronting the entire industry globally. If we are to once again re-invent our domestic auto sector, they must be confronted.
Industrial strategy
An ailing car industry is hardly novel to British experience. In the Seventies a combination of management in-fighting, militant unions, and Tony Benn resulted in some pretty dismal vehicles, and allowed foreign rivals to comfortably overtake us.
What happened next, however, is less well documented.
The Thatcher government, far from the caricature of bloodless uninterest in manufacturing, bailed out British Leyland, brought in a partner (Honda) and enticed to these shores other major players, including Nissan and Toyota.
Winners were picked. Some brands, like Triumph, vanished; others, like Land Rover, re-invented themselves.
By the Noughties, the sector was profitable again and exporting widely, exceeding 1.7 million units by 2016. (It wasn’t all plain sailing, though: our last volume manufacturer, Rover, was lost in 2005 after the Blair Government chose not to save it.)
But whilst we’ve turned round the car industry before, its current challenges are extremely complex. Manufacturers are divided on the zero-emission challenge: some are dashing for electric (VW), others are less convinced (Toyota). And as lifestyles change and cars get more autonomous, will we still be buying cars in future?
International pressure
On top of such big-picture issues, there are the more immediate challenges of growing international competition and the Sino-American scramble for supremacy.
Whilst British car production is down in recent years, so is output in France and Germany. (Italy has been miles behind us for years.) Things are rosier in the EU’s southern and eastern member states like Spain, the Czech Republic, and Slovakia.
Further afield, output keeps growing across Asia. Manufacturers are increasingly shifting to countries with low labour costs, not only to meet growing local demand but also for export.
Whilst volume production is increasingly challenging here and across the developed world, foreign owners have nurtured our prestige brands; Rolls-Royce and Bentley enjoyed record sales in 2022.
But whilst luxury purchases can weather a global recession, politics is never certain. Moscow millionaires can no longer buy British – could Beijing billionaires be next? Over-reliance on key markets is always a risk.
Local battery manufacturing (or lack thereof) is another crucial issue; it is the crux of the Stellantis-Vauxhall stand-off with the Government, and key to future viability.
But competition for investment is fierce – and perhaps unsustainable. Rushing to catch up with China, the USA’s Inflation Reduction Act threatens to annihilate EU competition with its vast subsidies.
Despite this, our domestic battery capacity is nevertheless developing, with Jaguar Land Rover (JLR) recently announcing a new Somerset site following the injection of government funding. To support meaningful energy security, we also need to develop British raw material sources, such as Cornish lithium reserves.
We might also consider whether electric cars are the only option, or whether UK can instead act as an incubator for alternatives.
Covid-19
Lockdowns hit the global car industry hard. And even when demand began to recover, extended supply chains struggled with ‘Covid whiplash’. Micro-chips have proven particularly challenging: JLR ground to a halt in 2021, creating an order backlog of 150,000.
More significantly, the pandemic looks to have accelerated permanent change: remote working locks in lower demand for new cars.
This comes on top of the demographic time-bomb already ticking under the car industry: cash-strapped young people are increasingly less likely to drive, preferring either new modes of transport or just staying put and interacting online.
After a century of buying and driving our own cars, we are at the cusp of a revolution. Whilst we are currently locked into a race to maximize electric vehicle (EV) capacity, this could prove a blip: on-demand, integrated travel known as Mobility as a Service (MaaS) has the potential, within a generation, to drastically reduce private car ownership.
The UK needs to be a forward-thinker in terms of how people travel. So far, we are doing better in some aspects than others.
Whilst fully self-driving (“level 5”) vehicles are still some way off, cars are becoming increasingly autonomous. The 2020 KPMG Autonomous Vehicles Readiness Index ranked us ninth, ahead of Japan and Germany but trailing the Scandinavians.
The Government is already backing key projects, including the world’s first full-sized, self-driving bus service in Edinburgh. We also have world-leading research connected, autonomous vehicles at such places as Loughborough and Cranfield.
But as the Government’s own ‘Future of Mobility’ policy paper notes, it’s not just about cars; mass transit and integrated transport are fundamental.
But that’s where the UK has fallen behind; no new tram systems have been built since 2004. We also need to start pioneering new alternatives such as very-light rail and trackless trams.
Net Zero
Whilst electric cars are fast improving, range remains low compared to a petrol (let alone a diesel), whilst public chargers can be elusive and expensive. High prices (plus rising interest rates on leases) are also a deterrent during the current economic downturn. As uncertainty over the 2030 ban looms, buyers could also start holding off on purchases.
So instead of an all-electric future, perhaps there are more cost-effective routes to lower emissions.
For many, a plug-in hybrid might be the optimum solution: a small battery delivering an electric daily commute and the range-extender engine eliminating anxiety about long-distance trips. Their overall environmental impact is also actually lower than a so-called pure EV.
But government policy, including Benefit In Kind company car taxation, weighs against these – perhaps something to review in future.
Another option once widely touted is hydrogen. Whilst fuel-cell vehicles beat EVs on range and re-fuelling time, high costs and limited infrastructure have made these the Betamax option for cars.
Hydrogen might yet find a role, though, in larger vehicles (HGVs, coaches) and niches such as agriculture and construction, where the UK’s JCB is taking an early lead by re-designing its engines. We need to consider how green hydrogen production (obtained via renewable electricity) can best be deployed both in transport and in energy storage.
Home-grown solutions may be the key. Third-generation biofuels (from algae) and synthetic e-fuels (produced via solar energy) are still at the development stage, and will need time and support to become commercialized.
But whilst the EU and Germany recently agreed that e-fuelled cars can be sold beyond 2035, the UK, is sticking with a 2030 cut-off (although some, including Iain Duncan-Smith, have called for a re-think). This will obviously deter investment..
The politics of motoring
Here in Derbyshire, I’m already hearing from irate tradesman impacted by Sheffield’s new Clean Air Zone. The backlash has started: Andy Burnham was forced to pause the proposed Manchester scheme, whilst fury at the proposed London ULEZ extension is fast turning the mayoral election into a single-issue referendum.
Drivers are getting fed up with restrictions on their daily lives. Whilst public transport clearly needs to improve, it’s not always the most practical option for everyone – especially in rural areas and in small towns.
The car still has a role to play. If we want a strong car industry, let’s stop alienating motorists, and stop making car ownership more difficult.
We need instead to focus on the most important outcomes, rather than fixating on particular solutions such as EVs.
Sanjoy Sen is a chemical engineer. He contested Alyn and Deeside in the 2019 general election.
The British car industry is facing challenging times. Last year, output fell below 800,000, although we are seeing recent signs of recovery; manufacturers have exited (Honda) or are threatening to (Stellantis-Vauxhall).
Whilst theories abound as to the cause, from Brexit to Covid to Net Zero, there are also several major challenges confronting the entire industry globally. If we are to once again re-invent our domestic auto sector, they must be confronted.
Industrial strategy
An ailing car industry is hardly novel to British experience. In the Seventies a combination of management in-fighting, militant unions, and Tony Benn resulted in some pretty dismal vehicles, and allowed foreign rivals to comfortably overtake us.
What happened next, however, is less well documented.
The Thatcher government, far from the caricature of bloodless uninterest in manufacturing, bailed out British Leyland, brought in a partner (Honda) and enticed to these shores other major players, including Nissan and Toyota.
Winners were picked. Some brands, like Triumph, vanished; others, like Land Rover, re-invented themselves.
By the Noughties, the sector was profitable again and exporting widely, exceeding 1.7 million units by 2016. (It wasn’t all plain sailing, though: our last volume manufacturer, Rover, was lost in 2005 after the Blair Government chose not to save it.)
But whilst we’ve turned round the car industry before, its current challenges are extremely complex. Manufacturers are divided on the zero-emission challenge: some are dashing for electric (VW), others are less convinced (Toyota). And as lifestyles change and cars get more autonomous, will we still be buying cars in future?
International pressure
On top of such big-picture issues, there are the more immediate challenges of growing international competition and the Sino-American scramble for supremacy.
Whilst British car production is down in recent years, so is output in France and Germany. (Italy has been miles behind us for years.) Things are rosier in the EU’s southern and eastern member states like Spain, the Czech Republic, and Slovakia.
Further afield, output keeps growing across Asia. Manufacturers are increasingly shifting to countries with low labour costs, not only to meet growing local demand but also for export.
Whilst volume production is increasingly challenging here and across the developed world, foreign owners have nurtured our prestige brands; Rolls-Royce and Bentley enjoyed record sales in 2022.
But whilst luxury purchases can weather a global recession, politics is never certain. Moscow millionaires can no longer buy British – could Beijing billionaires be next? Over-reliance on key markets is always a risk.
Local battery manufacturing (or lack thereof) is another crucial issue; it is the crux of the Stellantis-Vauxhall stand-off with the Government, and key to future viability.
But competition for investment is fierce – and perhaps unsustainable. Rushing to catch up with China, the USA’s Inflation Reduction Act threatens to annihilate EU competition with its vast subsidies.
Despite this, our domestic battery capacity is nevertheless developing, with Jaguar Land Rover (JLR) recently announcing a new Somerset site following the injection of government funding. To support meaningful energy security, we also need to develop British raw material sources, such as Cornish lithium reserves.
We might also consider whether electric cars are the only option, or whether UK can instead act as an incubator for alternatives.
Covid-19
Lockdowns hit the global car industry hard. And even when demand began to recover, extended supply chains struggled with ‘Covid whiplash’. Micro-chips have proven particularly challenging: JLR ground to a halt in 2021, creating an order backlog of 150,000.
More significantly, the pandemic looks to have accelerated permanent change: remote working locks in lower demand for new cars.
This comes on top of the demographic time-bomb already ticking under the car industry: cash-strapped young people are increasingly less likely to drive, preferring either new modes of transport or just staying put and interacting online.
After a century of buying and driving our own cars, we are at the cusp of a revolution. Whilst we are currently locked into a race to maximize electric vehicle (EV) capacity, this could prove a blip: on-demand, integrated travel known as Mobility as a Service (MaaS) has the potential, within a generation, to drastically reduce private car ownership.
The UK needs to be a forward-thinker in terms of how people travel. So far, we are doing better in some aspects than others.
Whilst fully self-driving (“level 5”) vehicles are still some way off, cars are becoming increasingly autonomous. The 2020 KPMG Autonomous Vehicles Readiness Index ranked us ninth, ahead of Japan and Germany but trailing the Scandinavians.
The Government is already backing key projects, including the world’s first full-sized, self-driving bus service in Edinburgh. We also have world-leading research connected, autonomous vehicles at such places as Loughborough and Cranfield.
But as the Government’s own ‘Future of Mobility’ policy paper notes, it’s not just about cars; mass transit and integrated transport are fundamental.
But that’s where the UK has fallen behind; no new tram systems have been built since 2004. We also need to start pioneering new alternatives such as very-light rail and trackless trams.
Net Zero
Whilst electric cars are fast improving, range remains low compared to a petrol (let alone a diesel), whilst public chargers can be elusive and expensive. High prices (plus rising interest rates on leases) are also a deterrent during the current economic downturn. As uncertainty over the 2030 ban looms, buyers could also start holding off on purchases.
So instead of an all-electric future, perhaps there are more cost-effective routes to lower emissions.
For many, a plug-in hybrid might be the optimum solution: a small battery delivering an electric daily commute and the range-extender engine eliminating anxiety about long-distance trips. Their overall environmental impact is also actually lower than a so-called pure EV.
But government policy, including Benefit In Kind company car taxation, weighs against these – perhaps something to review in future.
Another option once widely touted is hydrogen. Whilst fuel-cell vehicles beat EVs on range and re-fuelling time, high costs and limited infrastructure have made these the Betamax option for cars.
Hydrogen might yet find a role, though, in larger vehicles (HGVs, coaches) and niches such as agriculture and construction, where the UK’s JCB is taking an early lead by re-designing its engines. We need to consider how green hydrogen production (obtained via renewable electricity) can best be deployed both in transport and in energy storage.
Home-grown solutions may be the key. Third-generation biofuels (from algae) and synthetic e-fuels (produced via solar energy) are still at the development stage, and will need time and support to become commercialized.
But whilst the EU and Germany recently agreed that e-fuelled cars can be sold beyond 2035, the UK, is sticking with a 2030 cut-off (although some, including Iain Duncan-Smith, have called for a re-think). This will obviously deter investment..
The politics of motoring
Here in Derbyshire, I’m already hearing from irate tradesman impacted by Sheffield’s new Clean Air Zone. The backlash has started: Andy Burnham was forced to pause the proposed Manchester scheme, whilst fury at the proposed London ULEZ extension is fast turning the mayoral election into a single-issue referendum.
Drivers are getting fed up with restrictions on their daily lives. Whilst public transport clearly needs to improve, it’s not always the most practical option for everyone – especially in rural areas and in small towns.
The car still has a role to play. If we want a strong car industry, let’s stop alienating motorists, and stop making car ownership more difficult.
We need instead to focus on the most important outcomes, rather than fixating on particular solutions such as EVs.