India a bright spot for Brexit-hit UK car market

India a bright spot for Brexit-hit UK car market
India a bright spot for Brexit-hit UK car market

The number of Indian-built models registered by British buyers rose by almost half (48.6 per cent) to 21,135 units in the first half of this year alone. UK car production fell by -13.7 per cent in June, with 136,901 cars rolling off production lines, according to recent figures released by the UK's Society of Motor Manufacturers and Traders (SMMT). The third consecutive month of decline, following changes in production schedules for new model introductions, resulted in a -2.9 per cent year to date dip in output, triggering alarm bells over the impact of Britain's exit from the European Union (EU). More than 85 per cent of the cars registered by British buyers in the first six months of the year came from overseas plants, and more than two thirds (67 per cent) from the EU, highlighting the importance of mutually beneficial tariff and barrier-free trade. However, India has proved to be a robust market for British luxury cars, with the figures indicating a small but promising spike in exports from the UK to India. Indian demand for UK's premium cars rose 8.3 per cent in the first half of 2017, with India now Britain's seventh biggest Asian market. Over the same period, the number of Indian-built models registered by British buyers rose by almost half (48.6 per cent) to 21,135 units. “The demand in India tends to be in the premium segment and the latest figures reflect the growing attraction of Britain's luxury brands in the country,” said Mike Hawes, Chief Executive of the UK's Society of Motor Manufacturers and Traders (SMMT). “The UK and Indian automotive industries share a rich heritage of trade and investment, and strengthening this relationship through mutually-beneficial trade deals in the future is of the utmost importance,” he said. Exports to India grew to 1,650 units this year, moving India up from eighth place in 2016 to seventh for the UK automotive industry as an increasing number of affluent buyers take advantage of a range of all new premium and luxury British-built cars, according to the membership-led trade body. The upward trend vis-à-vis the Indian market contrasts with the overall picture for the industry, with UK car production falling by -2.9 per cent in the first half of 2017, attributed to the uncertainties triggered by Brexit.

The European Union (EU) remained the UK's biggest trading partner, accounting for more than half of all cars produced for export (54.6 per cent), with Germany and Italy the UK's second and third biggest single markets. The SMMT found that EU countries make up half of UK automotive's top 10 export destinations, highlighting the importance of continued free trade. Hawes cautioned: “World class engineering and products, strong government collaboration and massive investment have helped UK Automotive become a global success story. At the heart of this has been the free and frictionless trade we've enjoyed with the EU - by far our biggest customer and supplier. “Given the deeply integrated European vehicle and component supply chain, we need Brexit negotiators on both sides to recognise the importance of barrier free trade for the European automotive industry. Any disruption to this risks undermining one of the EU's most valuable economic assets. The industry needs certainty so an interim deal, maintaining UK single market and customs union membership until we have in place the complex new agreement with the EU, must be a priority for the UK in its withdrawal negotiations.” Production for export continued to drive volumes in 2017 as global demand for British-built cars dipped by a marginal -0.9 per cent in the first six months, with 683,826 cars shipped overseas. Production is forecast to rally in the second half of 2017. The projection is based on a number of new models and updates planned for production later this year - many from premium brands, helping to cement the UK as the world's second-biggest producer of premium cars after Germany. However, market softness both in the UK and certain key export markets may see the 2017 forecast revised. Looking further ahead, the base outlook with an interim Brexit deal secured, has been revised and the analysis forecasts industry will just miss the ambition of 2 million cars by 2020 (1,993,750). In the first six months, global demand grew in a number of markets, notably the US - the UK's biggest export region after the EU - where exports rose by more than a third (37.6 per cent) thanks to the launch of a raft of new models. Demand also grew substantially in Canada (66.7 per cent) and Australia (8.4 per cent), while China maintained its position as the UK's third biggest customer, taking 7.0 per cent of exports.

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