UK car sector fears for Trump tariffs as output falls
By AFP
January 30, 2025
Almost 80 percent of cars made in the UK last year were exported, mostly to the European Union, according to industry data - Copyright AFP Kirill KUDRYAVTSEV
Britain’s vehicle production slid below one million units last year as the sector transitions to electric cars, an industry body said Thursday as it warned over US President Donald Trump’s tariff threats.
Factories producing mainly foreign-owned brands, including from Japanese giant Nissan and Indian-owned Jaguar Land Rover, turned out a total 905,233 vehicles, down 11.8 percent on 2023, said the Society of Motor Manufacturers and Traders.
“Multiple factors impacted car volumes, with the end of production for some long-running models as factories retooled for EVs, weakness in key global markets, and a slowdown in the transition to electrification amid tough economic conditions,” SMMT added in a statement.
Output is forecast to decline further this year to 839,000 units before returning to above one million vehicles in 2028, it added.
“This is, however, dependent on global car and van market demand improving, positive economic conditions and greater consumer confidence — and the delivery of the competitive conditions necessary to ensure zero-emission model launches stay on track,” the SMMT noted.
Almost 80 percent of cars made in the UK last year were exported, mostly to the European Union, according to its data.
Production of battery electric, plug-in hybrid and hybrid vehicles together declined more than one fifth but still accounted for over one third of total UK output.
– Trump tariffs –
SMMT chief executive Mike Hawes expressed confidence in the outlook as long as the sector benefits from “industrial and trade strategies that deliver the competitive conditions essential for growth amidst an increasingly protectionist global environment”.
“With new, exciting models and battery production on the horizon, the potential for growth is clear,” he added.
The SMMT recently reported that the UK car industry sold a record number of all-electric vehicles in 2024 — but still fell short of the Labour government’s mandated targets.
Across the Atlantic, Trump wasted no time in taking aim at electric vehicles following his inauguration last week.
His executive order on “Unleashing American Energy” included steps to ensure a “level” playing field for gasoline-powered motors and halt federal funding to build new EV charging stations.
Hawes expressed concern over potential tariffs imposed on the car sector by Trump.
“We are concerned… about rising trade tensions and potential application of tariffs,” he told journalists on the eve of the production report.
“What we are seeing is increasingly protectionist noises… In terms of the US, tariffs is Donald Trump’s favourite word.”
Hawes said the United States was “an important market” for luxury vehicles, such as UK-produced Bentley and Rolls-Royce cars.
While that allowed for “a greater opportunity to absorb any potential tariffs… we would hope to avoid any”, he added.
EU holds auto talks to revive embattled car sector
By AFP
January 30, 2025
The German union IG Metall reached an agreement with Volkswagen on a cost-cutting plan to avoid forced redundancies at Europe's largest carmaker's production sites in Germany - Copyright AFP Kirill KUDRYAVTSEV
Umberto BACCHI
EU talks to relaunch Europe’s embattled car industry are to get underway on Thursday, with automotive CEOs awaited in Brussels to discuss fines and competition from China.
The European Union is under pressure to help a sector that employs 13 million people and accounts for about seven percent of the bloc’s GDP, as it seeks to revamp the continent’s lagging competitiveness.
Chaired by EU chief Ursula von der Leyen, the so-called “strategic dialogue” will bring together carmakers, suppliers, civil society groups and others.
“The EU Commission recognises the urgency and severity of the situation, and the need for decisive action,” the EU’s executive body said in a note.
The get-together comes as the commission is in the midst of a pro-business shift, with firms complaining that its recent focus on climate and business ethics resulted in excessive regulations.
On Wednesday, it unveiled a blueprint to revamp the bloc’s economic model, amid worries that low productivity, high energy prices, weak investments and other ills are leaving the EU behind the United States and China.
The car industry in particular has been plunged into crisis by high manufacturing costs, a stuttering switch to electric vehicles (EV) and increased competition from China.
As a sign of goodwill, carmakers have been calling for “flexibility” on the steep emission fines they could face in 2025 — something the bloc’s new growth blueprint said should be on the cards.
“I would personally find it strange to penalise players that we are otherwise trying to help for the benefit of competitors who do not have the same constraints, particularly Chinese,” the commissioner for industrial strategy, Stephane Sejourne, told France’s Le Figaro newspaper.
Under ambitious efforts to combat climate change, the EU introduced a set of emission-reduction targets that should lead to the sale of fossil fuel-burning cars being phased out by 2035.
About 16 percent of the planet-warming carbon dioxide (CO2) gas released into the atmosphere in Europe comes from cars’ exhaust pipes, the EU says.
As of this year carmakers have to lower the average CO2 emitted by all newly sold vehicles by 15 percent from 2021 levels or pay a penalty — with tougher cuts further down the road, according to clean transport advocacy group T&E.
The idea is to incentivise firms to increase the share of EVs, hybrids and small vehicles they sell compared to, for instance, diesel-guzzling SUVs.
But some manufacturers complain that is proving harder than expected as consumers have yet to warm to EVs, which have higher upfront costs and lack an established used-vehicle market.
“We want to stick to the objective… but we can smoothen the way,” von der Leyen said on Wednesday.
– Sales and tariffs –
Sales of electric cars slid 1.3 percent in Europe last year, accounting for 13.6 percent of all sales, according to the European Automobile Manufacturers’ Association (ACEA), an industry group.
Announcements of possible job cuts have multiplied. Volkswagen reached an agreement with unions in December to slash 35,000 positions across its German locations by 2030.
Meanwhile the market share of Chinese electric cars has ballooned in the EU in recent years, reaching 14 percent in the second quarter of 2024, up from less than two percent in 2020.
Yet, critics say lifting the fines would unfairly penalise producers who have invested in order to comply.
It would also remove a key incentive for firms to speed up their electric transition at a time when Chinese manufacturers have raced ahead.
“It’s sending a signal to European carmakers that they can slow down even though they are already late,” said Lucien Mathieu of T&E.
Fines aside, there are other ways Brussels could support the sector.
A senior EU official said incentives for businesses to buy electric are an option.
“Company fleets” account for more than half of new cars purchased in Europe, the official said.
The 27-nation bloc could also seek to improve a patchy charging network, modernise grids to allow for faster charging, bring down energy costs, cut regulations and loosen China’s grip on battery production, analysts say.
Brussels has already imposed extra import tariffs on China-made electric vehicles of up to 35.3 percent after an anti-subsidy investigation concluded Beijing’s state support was unfairly undercutting European automakers.
But in a sign of the lack of unanimity on the best course of action, the move, which was opposed by Germany and other EU members, is the object of a lawsuit by BMW, Tesla and several Chinese automakers.
The German car giant, which produces certain models in China, said the surcharges harmed “globally active companies” and “do not strengthen the competitiveness of European manufacturers”.
