2021: Still battling headwinds but when will they turn?

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After a devastating 2020, 2021 has not been much better for the UK automotive industry. Despite the rollout of vaccines from January, the pandemic continued to impact on the nation, with lockdowns and knock-on effects on the retail, manufacturing, supply chain and aftermarket sectors. Global shortages of semiconductors, and other materials such as magnesium, have created an unpredictable and disruptive environment for producers of vehicles and parts. Retailers enhanced their click and collect services and the aftermarket rose to the challenge, ensuring vehicles – especially essential vehicles – remained on the road and in service.

But the biggest threat to automotive recovery is not inflation, cost increases or weakening consumer confidence but the ongoing shortage of semiconductors – itself the direct result of the Covid crisis. While there are no quick fixes, with shortages and delays expected well into 2022, all parts of the sector are showing their resilience, working hard to mitigate the effects, fulfil orders and keep society mobile.

More positively, the turn of the year saw clarity in our trading relationship with the EU, following the signing of the UK-EU Trade and Cooperation Agreement (TCA). The TCA addressed the immediate concerns of the automotive industry, paving the way for tariff and quote-free trade but it is by no means an equal substitute for the benefits we previously enjoyed with the EU including friction free trading. Businesses have incurred additional costs, faced difficulties – some teething problems others more structural – and that is before the imposition of full import controls in ten days’ time. Should there be disruption, from ill-prepared freight or systems, contingency measures must be implemented immediately to keep cross border trade flowing smoothly.

2021 has also seen an acceleration in the decarbonisation of the transport sector, with more plug-in vehicles forecast to be registered during this year than the whole of the previous decade combined. This progress is testament to the significant investment that the industry has made to ensure the latest and greenest vehicles enter UK roads.

However, if this progress is to continue, we need to ensure affordability and accessibility by doubling down on long term incentives, rather than making cuts to the plug-in car and van grants. A boost to charging infrastructure rollout is also needed, with currently just one on-street public charger installed for every 52 new plug-in car registrations – wholly inadequate if we are to deliver on government ambitions.

Over the past year, SMMT has continued to support and promote the industry and its interests. The Covid-19 hub, for instance, which provides the latest news, guidance and updates for the industry, has been visited more than 21,000 times this year, with a further 6,500 views to the Brexit transition support hub. SMMT has released a plethora of reports and publications on key industry topics with the top three, SMMT Facts, SMMT’s Trade Report and SMMT’s Sustainability Report, being downloaded more than 11,400 times combined.

We can look forward to 2022 with some degree of optimism. Vaccine boosters offer hope against the latest variant, the semiconductor shortage will, we hope, gradually ease as the year goes on and there is undoubted demand for new products. SMMT will ensure the sector’s voice is heard, that its priorities are understood by policymakers and that the whole of the UK automotive industry has the best possible chance of success.

We will continue to deliver a wide range of in-person and online events, with SMMT’s Electrified 2022 set to build on the success of the inaugural event from this year. The conference, which will bring together 300 representatives from across the industry, government and consumer groups, will focus on the transition to zero emission mobility and how it can be accelerated. Tickets are available for purchase here.

So the year draws to a conclusion, with perhaps a sense of “good riddance to a tough year”, on behalf of everyone at SMMT, I hope you have a Merry Christmas and a prosperous and happy New Year. We look forward to working with you all in 2022.

The post 2021: Still battling headwinds but when will they turn? appeared first on SMMT.

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