- Independent report examines economic relationship between UK automotive industry and EU.
- Access to single market, integrated European supply chains, EU innovation funding, free movement of labour and the ability to influence harmonised technical regulations and product standards are key EU benefits.
- Industry survey shows 92% of automotive companies believe that staying in the EU would be best for their business, with majority seeking a reform agenda.
- Almost 70% believe that a withdrawal from Europe would negatively impact their business in the medium-to-long-term.
- Reform remains high on the agenda – especially the need to reduce complexity, encourage financial reform and consistently apply regulations.
The Society of Motor Manufacturers and Traders today released a new report, The UK Automotive Industry and the EU, produced by KPMG, which examines the relationship between the UK and the European Union. The report identifies some of the key aspects of the UK’s membership of the EU and how it affects the UK automotive sector, particularly in terms of investment, growth and job creation and found:
- The attractiveness of the UK as a place to invest, and the competitiveness of the domestic automotive industry, is enhanced by the UK’s membership of the EU.
- Access to the Single Market is fundamental to UK vehicle manufacturing, supporting sales and facilitating supply chain growth.
- EU bargaining power in trade negotiations is critical to improving access to international growth markets.
- In shaping regulations and standards, the UK needs a powerful voice at European level discussions to ensure the specific needs of the UK industry are met, safeguarding competitiveness and supporting its diverse nature.
- EU funding has boosted R&D and innovation at businesses and universities in the UK.
- Free movement of labour enables UK manufacturers and suppliers to blend domestic and international talent.
- Reform is still needed to remove burdensome EU regulations and reduce complexities which can undermine international competitiveness.
”The position of the UK automotive industry is clear – being part of a strong Europe is critical for future success," said Mike Hawes, SMMT Chief Executive. "This report, and our member survey, shows that Britain’s EU membership is fundamental to investment, growth and jobs in automotive companies of all sizes. The recent success of the UK automotive sector is due to its global competitiveness; competitiveness that is enhanced by a supportive business environment at home and access to the huge single market.
“If we are to maintain this position and increase access to growing global markets, the UK must play a key role in shaping EU policies, budgets and regulations.
“We must also increase our share of EU innovation funding to take advantage of the expertise the UK has in low carbon and other automotive technologies and secure the long-term future of the automotive business in the UK.”
John Leech, Head of Automotive at KPMG in the UK, commented, “Our report shows just how important the EU is to the UK automotive market – it is a highly globalised industry and integrated within the EU. This integration gives global manufacturers with facilities in the UK, for example, access to European consumers. Our analysis shows that, for the automotive industry, it is not a question of the EU versus emerging markets; they want to do business with both.
“The automotive businesses we spoke to also see the EU as an important bargaining force in global trade negotiations. Moreover, research and development, which is vital to the UK’s ability to be at the forefront of innovation in car manufacturing, is both heavily funded by the EU and requires access to the expertise and free movement of skilled engineers within the EU.
“While our report outlines the importance of EU membership to the UK automotive industry, it also poses some challenges to the sector. There is a clear demand for regulatory reform and consistent application of regulation so that complexity can be reduced.”
In addition to the report conducted by KPMG, a survey of SMMT members - covering companies of all sizes in the industry including supply chain, aftermarket, manufacturing and distribution - showed that 92% of automotive companies believe that staying in the EU would be best for their business. More than 70% of respondents believe that withdrawal from Europe would negatively impact their business in the medium-to-long-term.
SMMT members echoed the findings of the KPMG report, wanting to safeguard the benefits of EU membership but also calling for reform. One of the most important features of EU membership for the industry was the ability to deploy skills and expertise flexibly across the EU to meet local needs. However, members also said they wanted to see improvements in the way the EU operates, especially in the application of regulations, changes to the EU budget and in creating a stable and successful Eurozone.
About the research
This report The UK Automotive Industry and the EU, is an independent study commissioned by SMMT on how the UK automotive industry currently operates within the EU and the benefits or challenges that it presents. KPMG has examined the facts and collected opinions from the industry on potential for improvement and reform. The work builds on the position taken by the Automotive Council, the UK government’s Automotive Sector Strategy (‘Driving Success’) and the recent CBI and EEF reports into this issue.
In compiling this report, KPMG has combined both desktop research and analysis with industry interviews. Through the course of the fieldwork, KPMG conducted 20 interviews with a range of UK automotive industry participants. KPMG has also relied on the results of the SMMT Member Survey, which was conducted in parallel by SMMT. The survey was carried out in February 2014.
About SMMT and UK the automotive industry:
The Society of Motor Manufacturers and Traders (SMMT) is one of the largest and most influential trade associations in the UK. It supports the interests of the UK automotive industry at home and abroad, promoting a united position to government, stakeholders and the media.
The automotive industry is a vital part of the UK economy accounting for more than £60 billion turnover and £12 billion value added. With more than 700,000 jobs dependent on the industry, it accounts for 10% of total UK export of goods and invests £1.7 billion each year in automotive R&D. More than 30 manufacturers build in excess of 70 models of vehicle in the UK supported by around 2,500 component providers and some of the world's most skilled engineers. More detail on UK automotive available in SMMT's Motor Industry Facts 2014 publication at www.smmt.co.uk/facts14.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing audit, tax, and advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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