30 April 2018
As the most populous and one of the largest regions in the UK, with close proximity to the capital, the south-east has long enjoyed a strong economy.
It boasts the largest economy in the UK outside of London. Figures from the TUC highlight that by 2022 London and the south-east could account for 40% of national output [i].
And while the area is home to a number of major companies, including Vodafone in Berkshire and Electronic Arts in Surrey, there is one industry that really stands out in the south-east – the motor trade.
With McLaren, BMW and many other big names based in the region, it’s no wonder that the region and car manufacturing are synonymous with one another. We take a closer look
Car manufacturing in the south-east
Last year was a testing time for the UK car industry due to the introduction of new road tax rates, as well as uncertainty over Britain’s withdrawal from the EU and the announcement of a ban on the sale of petrol and diesel cars by 2040.
In 2017, the number of cars built in the UK fell by 3% compared with 2016, down from 1,722,698 to 1,671,166, according to figures by the Society of Motor Manufacturers and Traders (SMMT) [ii]. And sales of new cars fell by 5.7% [iii]. But should motor traders in the south-east be worried?
Although 2017 saw the first decline in UK car output in eight years, it was still the second biggest year for production since the turn of the century. In fact, some key car plants in the south-east saw an upturn in manufacturing, with engine-makers performing particularly strongly.
Ford’s engine plant in Dagenham made 793,200 engines in 2017, an increase of 10,500 on 2016 “despite fragile demand and anti-diesel rhetoric”, according to Ford UK boss Andy Barratt [iv]. He said this success was largely down to the popularity of its Transit van.
BMW’s plant in Cowley, Oxfordshire, turns out more than 200,000 Minis a year. The Mini is the second best British seller worldwide after the Nissan Qashqai. However, there are fears that the company could up-sticks if Brexit negotiations stall [v].
SMMT chief executive Mike Hawes says: “The UK automotive industry continues to produce cars that are in strong demand across the world and it’s encouraging to see growth in many markets. However, we urgently need clarity on the transitional arrangements for Brexit, arrangements which must retain all the current benefits or else around 10% of our exports could be threatened overnight.”
Upsurge in electric and hybrid vehicles
While the motor industry as a whole faces uncertainty, electric vehicles are enjoying a surge in popularity, with a greater emphasis on reducing emissions in major cities, including London. Commercial vehicles are spearheading the charge, with an increase in plug-in vans, buses and trucks.
Renault has created an all-electric delivery van, the Master ZE, aimed at city driving, while Ford is trialling its new plug-in hybrid Transit Customs in London and the south-east in partnership with organisations including British Gas and the Metropolitan Police.
Elsewhere in the region, Arrival – the UK’s first electric-only truck manufacturing plant – opened in Banbury Cross, Oxfordshire, last summer. It plans to develop vehicles up to 26 tonnes, and Royal Mail is currently trialling the trucks.
Outlook for diesel and petrol vehicles
Last year, the Government announced that the sale of petrol and diesel cars will be banned by 2040. In the meantime, local authorities across the country, including the south-east, are looking at ways to tackle air pollution. This may see the introduction of clean air zones similar to the London Congestion Charge and T-Charge zones.
Oxford could become the first city to ban both diesel and petrol cars. In October last year, the city council launched a consultation on proposals to ban all non-zero emissions cars from the city centre. Under the plans, petrol and diesel cars, taxis, buses and light commercial vehicles would be prohibited from using certain streets by 2020, with the ban extending to cover all non-zero emissions vehicles from the whole of the city centre by 2035.
In London, mayor Sadiq Khan plans to reduce pollution levels in the capital further by introducing an Ultra Low Emission Zone in 2019 and extending it beyond central London from 2020 to the North and South Circular. Cars, vans, lorries and buses that fail to meet emissions standards will be charged a rate of at least £12.50.
NIG can steer you right
It’s not just motor manufacturers which will be affected by changes, within the industry – service and repair and car sales businesses up and down the country will also feel impact and that’s where NIG comes in.
As these businesses adapt to the changes, they should always check they’ve got the right insurance in place. Specialist policies are available for motor traders, covering areas such as public liability, sales indemnity, personal accidents and business interruptions.
Our south-east regional trading office in Kent recently moved to new premises in Kings Hill, West Malling, and is made up of 20-plus staff, each with more than a decade of experience within the insurance industry. All underwriters on the team are multi-class, meaning brokers only need one point of contact for all classes of business. This, coupled with the fact that all brokers’ needs are aligned with specific underwriters helps to develop great, long-lasting relationships.
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