Investment in UK car industry takes a back seat

Investment decisions by car makers have halted due to the uncertainty surrounding the UK’s post-trading arrangements with the EU, according to chief executive of the Society of Motor Manufacturers and Traders (SMMT) Mike Hawes.

Hawes told Members of Parliament on Tuesday that investment has slowed compared to the previous boom in activity.

"We are putting together the data as best we can," he said. "But I sense certainly that the amount invested over the last 12 months will not be as high as the preceding one, two, three years."

Despite Nissan’s decision to build two new models at its Sunderland plant last autumn, other companies appear to be waiting on key decisions according to Hawes.

"It was great news that Nissan did commit there", he said. "Each individual manufacturer will be in a different position. You can't draw too many conclusions from one manufacturer".

"Certainly, I believe that companies are at least sitting on their hands... until there is a bit more clarity," he added.

In recent years UK car production has shot up due to record investment. In 2015, investment in research and development rose to £2.5bn, up 8.7% from the year before, according to SMMT’s 2016 Automotive Sustainability Report.

Hawes thinks Britain will come off these highs as carmakers weighing up investment decisions today would be looking at starting production in about four years, taking into consideration the likely trading and cost conditions in 2021.

"If the government can give some sort of assurance that it will be looking over those sort of timescales to give as much certainty as it can give in uncertain times, that will be much better received," he said.