The British motor industry is a vital part of the UK economy accounting for Â£40 billion turnover and Â£8.5 billion in additional value. In light of the Spending Review and the economic situation, we review the latest motor industry trends to see what the future holds for one of the economy’s most important industries.
With over 700,000 jobs dependent on the industry, UK motor manufacturing accounts for 9% of total UK exports and invests Â£1 billion each year in research and development alone.
Given the current state of the economy, business is far from booming for new car manufacturers. The September market for the new ‘60’ plate fell 8.9% to its second lowest figure since bi-annual car registrations were first released in 1999. Just 335,246 units of new cars were sold in September as new car buyers continue to look thin on the ground.
But amid all the doom and gloom of the spending review and poor September car sales, the downturn in the economy has meant good news for some businesses: sales of spare car parts are booming.
According to car parts website 247Spares.co.uk sales of car parts have increased by 50% since 2009 as cash strapped motorists try and keep their cars going for longer.
Imran Asghar from the 247Spares website said that he believes more motorists than ever before are adopting a more cautious approach when it comes to spending money on cars.
“The majority of our customers are either looking to fix a problem with an existing vehicle or have just bought a second hand vehicle – possibly for a bargain price – and are looking to improve it,” he said.
Data from the Society of Motor Manufacturers and Traders shows 7.425 million of the 31.167 million cars on UK roads are aged between three and six years old and this is likely to grow as a result of the economic downturn.
3.6 million second hand cars are bought each year and consumers spend Â£24 billion each year. The number of motorists looking to buy a second hand car over the next six months has increased by 172,000, recent research shows.
As the majority of Brits get used to living in an ‘age of austerity’ selling car parts and second hand cars looks set to continue to be a profitable business in which to be in, but the effects of the downturn in UK motor manufacturing could have a considerable knock-on effect onto the wider economy, given the importance of the industry to large swathes of the British economy.
Without similar Government stimulus to growth similar to the introduction of last year’s Car Scrappage Scheme, which offered a much needed boost to the motor industry, it seems hard to see what the future holds for UK motors plc.