What does the car industry look like in 2020?

The coronavirus pandemic and the impending Brexit could have a severe impact on the future of the automotive industry.

This year will live long in the memory of every person on the planet for all the wrong reasons. 

The coronavirus pandemic has caused despair in almost every community, causing many of us to lose loved ones, lose jobs, and generally feel like we’re in a never-ending cycle.

On top of this, Britain has been in the midst of discussions with the European Union ahead of the finale of Brexit at the end of 2020, a saga that has been ongoing for several years now.

The two factors combined have made this year very difficult for many industries, and none has or will be hit harder than the automotive industry here in the UK.

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A no-deal Brexit would be ‘catastrophic’ for the sector, with eight out of 10 cars built in the UK being exported, and the supply chain for imports to the UK stretching across multiple countries. 

In this article we look back at the industry over the past 12 months and what the future could look like, taking COVID-19 and Brexit into account.

Employment in the car industry

The automotive industry employs just under one million people in the UK. Of those, almost 200,000 of them are directly employed in the manufacturing of vehicles. 

The industry is also great for providing young people with opportunities straight out of school and college, with almost 60,000 engineering and manufacturing apprenticeships being offered since 2018.

It has been forecasted that 20,000 new jobs will be created by 2030, but Prime Minister, Boris Johnson, said that a further 40,000 could be created in the nuclear energy sector due to the proposed ban on new diesel and petrol vehicles from the same year.

On top of this, the motorsport industry is thriving more than ever in the UK with the success of Great Britain’s Lewis Hamilton, who recently equalled Michael Schumacher’s Formula 1 title record of seven Championships. More than 40,000 people are employed in motorsport in the UK, 25,000 of whom are engineers. 

However, the pandemic has led to many people across the country being placed on furlough, and the automotive industry was no different. In the car manufacturing heartlands such as the northeast and the midlands, many plants were forced to shut their doors and sadly, many people have been made redundant due to the current climate.

With Brexit properly coming into play in the new year, it’s estimated that many more people will lose their jobs as a direct result of both coronavirus and Brexit - the latter being of particular significance, especially if a trade deal is not agreed.

Car registrations in 2020

The number of car registrations this year is down by 31% on 2019, with the pandemic being the number one cause of this. Just over 1.5 million new cars have been registered in 2020, compared to 2.2 million in 2019.

November 2020 saw the lowest number of cars registered in that particular month since November 2008. On average 155,000 cars are registered in the month of November, but we only saw 114,000 registered last month.

The best selling cars of 2020 thus far are:

  1. Ford Fiesta
  2. Vauxhall Corsa
  3. Volkswagen Golf
  4. Ford Focus
  5. Mercedes-Benz A-Class
  6. Nissan Qashqai
  7. MINI
  8. Volkswagen Polo
  9. Ford Puma
  10. BMW 1 Series 

We as a nation love our cars but this year has been very different and it’s therefore unsurprising that we’ve seen such a drop off of new registrations compared to previous years.

Petrol cars remain to be the firm favourite of new car punters, with 846,000 purchased this year. Next up is diesel, selling 246,000 and this is followed by MHEV petrol, HEV, BEV, PHEV, and MHEV diesel vehicles respectively, all accumulating for around 400,000 of the new registrations. 

Digitalisation of automotive manufacturing

The digitalisation revolution is already taking shape. Manufacturers and suppliers are benefitting from increased productivity, greater flexibility, and shorter times to market.

There are many benefits to this new way of life, already being able to reduce parts inventory by up to 20% and increase productivity by up to 5%.

The benefits of things becoming more hi-tech not only impacts the industry but the wider economy, at around £1.7 billion. It is hoped that by 2035, that number will have grown exponentially to £74 billion, further signifying that the automotive industry is one of the country’s most valuable.

UK automotive and the European Union

The deal (or no deal) the PM makes with the EU could be detrimental to the industry as we know it. Almost 70% of cars registered in the UK are imported from the EU. The same can be said from car vehicle components coming from the EU, they make up 80% of what we use here.

Immigration has and always will be an integral part of life in the UK, with at least 10% of people employed in the UK automotive manufacturing sector coming from elsewhere in the EU.

The World Trade Organisation (WTO) adds a 10% tariff to all exports and imports to the UK which equates to around £5 billion. The sector generates trade worth more than £100 billion, with over £40 billion being exported and just under £60 billion being imported. 

A no-deal Brexit would slash this substantially which could mean a shortage of vehicles and also jobs being cut due to a lack of demand.

The environment and effects of vehicle emissions

As previously mentioned, the UK government aims to ban the sale of new petrol and diesel cars by 2030, with the aim of tackling climate change and creating new jobs in new industries such as nuclear energy. 

It had previously been stated as 2035 when this ban would come into play but has been brought forward five years as the global crisis worsens. 

The ban only impacts new cars bought; second-hand petrol and diesel cars are permitted but we should expect to see a massive change on the roads as people turn their attention to electric and hybrid vehicles.

BEVs (Battery electric vehicles) only run on batteries and do not have internal combustion engines, making them much cleaner for the environment.

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The shift from ICE to electric will provide lots of new jobs, which will be critical as and when we start to move on from the coronavirus pandemic. It’s estimated that bringing this rule into 2030 from 2035 could create an extra 40,000 jobs. 

Not only that, but the emissions reductions from this change would be the equivalent of taking more than four million cars off of the road.

This year has been rough for everyone and the hope is that we can thrive as a nation in 2021 and beyond. 

The automotive industry will be a key factor, though, so the hope is that Mr Johnson can strike up a deal with the EU, to not only save and protect our economy but our jobs.

All figures from this article can be found in this SMMT report.

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