The UK’s electorate has spoken and there is to be a change of government in London. Among the many questions on our minds concerning next steps are sector-specific ones. New ministers now have to develop policies and plans for the management of the UK’s economy and major sectors of the economy. The automotive industry is well and truly in the mix when it comes to the new government’s industrial strategy. To make things even more interesting – or complex – it’s a sector that is in the throes of major transformative change led by advanced technologies. There is the immense challenge of net-zero and the energy transition away from combustion engines to electric powertrains. On top of that, there is the small matter of promoting sustainability all along complex value chains that span the supply of raw materials such as steel, through all the tiers of parts manufacturing, to retail and aftermarkets – not forgetting the jobs that lay in vehicle manufacturing/assembly. The industry’s UK automotive trade association, the SMMT, has some compelling stats on how important the sector still is to UK plc. Automotive-related manufacturing contributes £93 billion turnover and £22 billion value added to the UK economy, and typically invests around £4 billion each year in R&D. Many of these automotive manufacturing jobs are outside London and the South-East, with wages that are around 13% higher than the UK average. The sector accounts for 12% of total UK exports of goods with more than 140 countries importing UK produced vehicles, generating £115 billion of trade in total automotive imports and exports. More than 25 manufacturers build in excess of 70 models of vehicle in the UK supported by 2,500 component providers and some of the world’s most skilled engineers.

US sales

GlobalData’s forecast for US LV sales in 2024 is now pushing closer to 16.2 million. According to preliminary estimates, Light Vehicle (LV) sales fell by 3.8% year-on-year (YoY) in June, to 1.33 million units. The CDK cyberattack has caused significant disruption across the industry, and therefore some brands could potentially see larger revisions than would normally be the case. Still, sales in June are unlikely to change for many of the largest OEMs, while there is a possibility that volumes in July will see a boost instead. The annualized selling rate was 15.3 million units/year in June, down from 16.0 million units/year in May. The daily selling rate was estimated at 51k units/day in June, compared to 55.4k units/day in May. Given the obvious challenges that the industry faced in June, we should not read too much into either the annualised or daily selling rates this month.

China rising

In May, the Chinese Light Vehicle (LV) market exhibited a steady uptick and continuous structural optimisation, reflecting a positive recovery trend. Domestic LV sales, excluding exports, reached 1.9 mn units, marking a 3.2% year on year (YoY) decrease but a commendable 5% month on month (MoM) increase. Within the segment, Passenger Vehicle (PV) sales, influenced by the high base of the same period last year, declined by 3.5% YoY, yet still accounted for 1.7 mn units. Meanwhile, Light Commercial Vehicle (LCV) sales totalled 222k units, with a minor YoY decline of 0.6%. Cumulatively for the first five months of this year, LV sales amounted to 9.1 mn units, a 3.0% YoY increase. Within this, PV sales contributed significantly to the growth, reaching a total volume of 8.0 mn units, a 3.4% YoY increase. In contrast, LCV sales remain a substantial part of the market, though slightly down by 0.1% YoY at 1.1 mn units. The implementation of the “old for new” policy’s cash subsidy details, the Beijing Auto Show’s stimulation of consumer enthusiasm, and the temporary cooling of the new product price war in the auto market have slightly eased the market’s wait-and-see sentiment. Consequently, MoM, PV sales rose by 6.5% compared to the previous month. However, the LCV sector’s recovery appears to require more time, as it still experienced a 4.8% MoM decrease in May.

EU tariffs

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Can Chinese car manufacturers still flourish, despite the upcoming tariffs? GlobalData’s forecast suggests yes, even though the tariffs may delay the advance of BYD, MG and others. The European Union (EU) announced it will impose provisional tariffs on Chinese Electric Vehicle imports from 4 July through to 2 November 2024. After this, the tariffs will apply definitively unless a qualified majority of EU member states vote against them, or negotiations with China reduce the penalties. It is also important to note that the tariffs are levied upon CIF (Cost of Goods, Insurance & Freight) border prices so that the impact of the penalty on the end user retail vehicle cost is diluted.

Tariffs happen

The European Union will impose tariffs of up to 37.6% from Friday on imports of electric vehicles made in China, EU officials told Reuters, ratcheting up tensions with Beijing in Brussels’ largest trade case yet. There was, however, a four month window during which the tariffs are provisional and intensive talks were expected to continue between the two sides as Beijing threatens wide ranging retaliation. Reuters noted the European Commission’s provisional duties of between 17.4% and 37.6% without backdating were designed to prevent what its president Ursula von der Leyen had said was a threatened flood of cheap EVs built with state subsidies. The rates, laid out in a 208-page document published on Thursday, were almost the same as those announced by the commission on 12 June. The executive made adjustments after companies identified minor calculation errors in the initial disclosure.

Women under represented

30 June, 2024, marked National Girls in Automotive Day; a day to promote the automotive industry and career opportunities within it. As we currently stand, women are very under represented in the industry, making up less than 20% of the UK’s automotive sector workforce. This low statistic is surprising considering the industry is suffering from an ongoing shortage of skilled professionals, predicted to amount to over 160,000 vacancies by 2031. Frankie Youd spoke with Irene Castelanotti, Digital Business Director at Autodata, to learn more about the day and to discuss if the tide for female mechanics is shifting.

H2 goes racing

Radical off-road racing series Extreme E showcases motor racing in some of the most remote corners of the planet that are impacted by climate change. The underlying objective is to highlight global challenges and inspire the next generation. On Thursday 27 June, onboard the series’ St Helena vessel, it was revealed that a new racing series is about to be born: Extreme H. It is a first-of-its-kind hydrogen racing series that showcases hydrogen technology in a competitive racing environment. The organisers claim it represents a step forward in the transition to clean energy. A newly launched vehicle – the Pioneer 25 racing car – has been designed to demonstrate the performance capabilities of hydrogen fuel cells. The Pioneer 25 itself has been designed and manufactured by Spark Racing Technology, and is equipped with a hydrogen fuel cell from Symbio.

BYD Thai EV build

BYD Auto inaugurated its newly built vehicle assembly plant in Thailand as the company stepped up expansion into south east Asia and other emerging electric vehicle (EV) markets around the world. The opening of the plant in Rayong province took place just a day before the European Union was scheduled to hike duties on battery electric vehicles (BEVs) imported from China. Speaking at the opening ceremony, BYD chairman Wang Chuanfu said the Rayong facility “has an annual capacity of 150,000 vehicles, including four major processes of vehicle and parts production. It will create about 10,000 jobs”. Wang said the factory initially would produce battery electric vehicles (BEVs) such as the Atto 3 (Y Plus), Dolphin and Seagull, before adding plug-in hybrids such as the Sea Lion 6 (Song Plus) later on. The plant would supply other markets in the region as well as Thailand.

More collaboration

Nissan and Honda are close to reaching an agreement to co-develop automotive software for future vehicles and to collaborate in establishing electric vehicle (EV) charging networks, according to local reports. The two automakers want to share costs and speed up development of new technology and infrastructure with the aim of making up ground on their global competitors in the transition to zero emission and software defined vehicles. The two automakers are currently understood to be thrashing out the finer details of agreements covering the joint development of a shared operating system and other software.

UK sales up

The UK new car market has hit the half year million motors mark for the first time in five years, after new car registrations rose in June by a modest 1.1% to reach 179,263 units, according to figures published by the Society of Motor Manufacturers and Traders (SMMT). So far in 2024, 1,006,763 new cars have been registered in the UK, up 6.0% on the previous year but still down 20.7% on 2019. Once again, June’s market growth was driven primarily by the fleet sector, where uptake rose by 14.2%, while private retail demand fell for the ninth consecutive month, down 15.3%. Retail buyers accounted for fewer than four in 10 new cars registered (37.7%). Electrified vehicle uptake continued to grow in the month of June, with plug-in hybrid (PHEV) volumes up 30.0% to reach a 9.3% market share, while hybrid electric vehicles (HEV) rose 27.2% to achieve 14.9% of the market.

They keep coming

Jaecoo, which makes premium SUVs, will make its European public debut at this year’s Goodwood Festival of Speed on 11-14 July. Jaecoo is part of Chery and, like Omodo, an export only brand. The 7 is a rebadged Chery Tansuo 06. Offered with 2WD and 4WD, the 7 is powered by a 1.6 litre turbocharged four cylinder petrol engine with Getrag seven speed dual clutch transmission. Plug in hybrid and all electric variants will follow.

Parts, too

China’s Ningbo Zhenyu Technology plans to invest EUR50m (US$53.7m) to open a car parts factory in the Serbian city of Apatin, the municipal administration told Apatin mayor Dubravka Kopac and representatives of the Chinese company signed a memorandum of understanding on the project which defines the obligations of the two sides related to the construction of the planned factory, the municipal administration said. The planned factory will produce car parts such as rotors, stators and other items using stamping, welding, assembling, pressure casting and digital control technology.

UK struggling

UK car output remains way under pre-pandemic levels and is struggling to recover volume as it faces challenges in electrification and developing more export business to replace recently lost manufacturing capacity, according to a GlobalData analyst. Justin Cox points out that UK car production is running way under where it was pre-pandemic. “The UK auto industry is struggling in overall volume terms this year,” he says. “This year there is certainly some negative impact from significant model changes and that’s to be expected, but we are also seeing a slower than expected ramp-up of new Mini production at Oxford. Our forecast for this year sees UK car output at a little over 0.8 million units. It was much higher before the pandemic, but we see it settling in the medium-term at around a million units a year. 2019 UK car output was 1.3 million units.”

Have a nice weekend.

Graeme Roberts, Deputy Editor, Just Auto