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UK Car industry (paper3)

  • During COVID car sales dropped to 1.6m in 2020 (the lowest it’s been since 1992) after peaking at 2.7m in 2017 Johnson Matthey PLC

  • British chemicals company exiting the battery chemical market

  • Hinders UK EU production -> chemicals must be imported from the dominant Chinese and European firms

  • Left due to a lack of profit as competition pushes down the price

Nissan

  • Nissan production uses Kaizen to refine flow to be more efficient and minimise errors

Sutherland Nissan factory:
• 2 lines making 519,000 per annum
• 6,000 directly employed + 30,000 indirectly employed
• £10 million battery facility nearby
• Uses 10 wind turbines and solar farms
• Since 2011 employees have undergone 2 million hours of training for electric vehicles
• Heavily automated
• 900 employed in research + development
• Second battery factory underway

SWOT ANALYSIS: BRITISH CAR INDUSTRY

  • Strengths:
    • Globally recognised brands e.g., Land Rover, Mini
    • Good supplier network, especially for engines
    • Proximity to Europe
    • High education levels for quality manufacturing
  • Weaknesses:
    • In 5 years, the UK production has halved
    • Brexit complicates exports
    • Low attraction for FDI due to Brexit (no longer in a trading bloc)
    • Few factories at a globally competitive scale
  • Opportunities:
    • High innovation can be capitalised on using higher education for quaternary expansion
    • Electric vehicle production requires investment in battery production (gigafactory proposed next to Coventry airport)
  • Threats: • No battery plants, very far behind in the transition to electric vehicles • Electric minis made in China instead of Oxford (easier to assemble there) • $7,500 subsidy in the US for each “green” car threatens 16% of UK exports going to the US

Trends:

  • In the last 10 years, sales have dropped (in the market by 32%)
  • Though sales of petrol and diesel cars slumped, sales of battery electric cars such as the Nissan Leaf grew to about 6.6% of the UK market
  • Shift towards SUVs – 40% of annual car sales (twice as high as it was 10 years ago)
    • Electric vehicles and increased efficiency saved 2.1m barrels a day of diesel and petrol, but SUVs added 3.3m barrels a day
    • Electric vehicles on the world’s roads expected to increase to 145m by 2030

As the motor industry turns electric, it is important for employees to have digital/electrician skills to repair and understand how the car works, making it more difficult to recruit as there is a higher demand for highly skilled/qualified workers rather than apprentice/mentor relationships which were more common in the past.

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