John Leech, KPMG UK head of automotive, comments on The Society of Motor Manufacturers and Traders (SMMT) UK car production figures which rose by 6.5% in October and 9.7% over the year-to-date:
“As expected, UK car production bounced back in October after a surprise decline of 5.8% in September. But despite troubles in Europe still posing a threat to demand, UK car plants are continuing to win market share across Europe and premium automakers are still benefiting from strong demand from the emerging markets. We expect to see these trends follow this route over the next few years and therefore expect UK production to continue to grow on average by 9% per annum to 2.2 million vehicles in 2016.
“However, there is an emerging industry issue in the supply-chain around finance. Many suppliers are starting to see volumes decline as Eurozone demand crumbles while some suppliers to premium automakers such as Jaguar Land Rover (JLR) are struggling to raise the finance necessary to invest in tooling for new models. As supplier cash pressures intensify there is a need for banks and the finance industry to innovate and we expect new debt arrangements to be developed, which would bring together suppliers, automakers and banks in new contractual arrangements.”
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