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Nissan Qashqai

Booming UK car production hits 14-year high in August

Nissan QashqaiA boost in car exports of more than 10% in August 2016 has seen UK car production reach its highest total for the month since back in 2002, the SMMT has today revealed.

Almost 111,000 cars were built in Britain during August 2016, growth of 9.1% over the previous year and further strengthening the British car industry’s rolling yearly output growth of 12%.

The lack of a post-Brexit recession has helped home demand hold up, with production for British customers up 6.2%. It’s the rise in exports of 10.2% that really helped grow UK car production during August, though – continuing a trend seen throughout the year, which is up more than 13%.

Year to date, 877,523 cars have been built in Britain and exported to other nations.

Mike Hawes, SMMT chief executive, said: “August’s strong performance is good news for car makers and welcome news for the UK economy, which depends on this thriving sector for an increasing share of UK exports.

“British car producers are exporting a diverse range of high quality, attractive new models that are in demand across the world thanks to multi billion pound investments made in UK plants over the past few years.”

Hawes did sound a Brexit-themed warning, though. “Future success depends on continued investment in plant and products and that in turn depends on the UK maintaining internationally competitive business and trading conditions.” Politicians, he could have added, take note…

The growth of the British car industry over the past decade or so has been striking – and it comes after a nadir was reached in the mid-2000s following years of gradual decline.

Back in 2002, MG Rover was still a big British car manufacturer; its collapse in 2005 hit UK car production hard. But foreign investment has seen the industry recover since then and today’s figures for August 2016 are latest evidence of its continued growth.

Jaguar XE

Jaguar moves XE production from Solihull to Castle Bromwich

Jaguar XEJaguar is moving production of its XE junior executive saloon from Solihull to Castle Bromwich to help boost volumes of the Solihull-built F-Pace SUV.

The Solihull ‘factory within a factory’ – a new Jaguar production facility built within the Land Rover Solihull plant’ – will now be used only to build the in-demand F-Pace SUV for Jaguar.

In moving the XE to Castle Bromwich, Jaguar will construct it alongside the larger XF executive saloon: the two cars use the same aluminium architecture so the process should be straightforward. To facilitate the move, Jaguar is investing an extra £100 million in Castle Bromwich.

It’s quite a turnaround for Castle Bromwich, which faced closure in 2008. Since then, Jaguar has invested heavily in it: £500 million has gone into it in the past two years alone.

Castle Bromwich currently builds the Jaguar XF plus the low-volume XJ and F-Type, and so is arguably underutilised. In contrast, the Solihull line builds the high-volume XE and ultra-successful F-Pace: it also, oddly, builds the Range Rover Sport on the same line, another in-demand machine.

Moving the XE to Castle Bromwich will fill capacity at the huge plant next to the M6 motorway, leaving Solihull to concentrate on the F-Pace – which has already become the fastest-selling Jaguar of all time.

So far this year, Jaguar sales are up 72%, to 85,726 – and in August, with the F-Pace fully on stream, they rocketed 104% to 10,868. The Jaguar XE was launched in the United States this summer.

Solihull will continue to operates 24/7, with three shifts running around the clock during weekdays.

Video: Jaguar XE at Castle Bromwich

Toyota Burnaston

Britain has built 1 million cars already in 2016

Toyota BurnastonNew car production in Britain is marking a full year of growth by topping the 1 million year-to-date production total, the SMMT has revealed.

1,023,723 cars have been built in the UK thus far this year, a 12.3% increase on 2015 figures – and, encouragingly, exports have outpaced even this growth, with volumes sent overseas up 13.7%.

This is particularly good news for post-Brexit UK: the fall in the value of the pound makes exports more lucrative for car makers.

The running total is the best performance since 2000 and it’s the first time since 2004 that volumes have risen above 1 million in the first seven months.

“UK car production in 2016 is booming,” said SMMT chief executive Mike Hawes, “with new British-built models in demand across the world.”

So far in 2016, 77.8% of UK car production has been exported overseas – that’s almost 800,000 vehicles.

“Manufacturers have invested billions to develop exciting new models and produce them competitively in the UK.”

But what about the risks of Brexit and car makers taking investment to other countries? Hawes indirectly addressed this too.

“Future success will depend on continued new car demand and attracting the next wave of investment, so Britain must demonstrate it remains competitive and open for business.”

Over to you, government ministers…

John Paul Gregory, head of exterior design, Bentley Motors

Bentley’s new head of car design is a Brit

John Paul Gregory, head of exterior design, Bentley MotorsBentley has appointed John Paul Gregory to lead its exterior design division, three months after previous incumbent SangYup Lee left for his native South Korea to become vice president of styling at Hyundai.

Gregory, a Brit, starts immediately in the vacant role as Bentley prepares to roll out its next new car following the launch of the bold Bentayga.

The first production car under Gregory’s watch is likely to be the new Bentley Continental GT, due in 2017 – and this is still set to be partly be ‘his’ car despite only now taking on the lead role: previously, Gregory was advanced exterior design leader.

He will have helped create the initial concepts for the new Continental GT; similarly, Gregory will have shaped the pretty Speed 6 concept, which many are willing to follow the new Continental (possibly as Bentley’s first EV sports car).

Prior to joining Bentley in 2008, Gregory spent four years as exterior designer at Volkswagen, following completion of a masters degree in automotive design.

He studied in the UK before then, gaining an honours degree in transportation design at the University of Northumbria.

Stefan Sielaff, Bentley director of design, said: “John Paul’s experience at Bentley is invaluable. He brings a passion for the brand and a deep understanding of the direction we wish to go in.

“This is an important time for the company as we look ahead to new models with John Paul, alongside our highly-skilled design team, bringing many insights and ideas to inspire the next great Bentley.”

For his part, Gregory said: “I look forward to helping shape the next chapter and maintaining Bentley’s iconic status as a creator of luxurious, desirable, high performance cars.”

John Paul Gregory, head of exterior design, Bentley Motors

Bentley's new head of car design is a Brit

John Paul Gregory, head of exterior design, Bentley MotorsBentley has appointed John Paul Gregory to lead its exterior design division, three months after previous incumbent SangYup Lee left for his native South Korea to become vice president of styling at Hyundai.

Gregory, a Brit, starts immediately in the vacant role as Bentley prepares to roll out its next new car following the launch of the bold Bentayga.

The first production car under Gregory’s watch is likely to be the new Bentley Continental GT, due in 2017 – and this is still set to be partly be ‘his’ car despite only now taking on the lead role: previously, Gregory was advanced exterior design leader.

He will have helped create the initial concepts for the new Continental GT; similarly, Gregory will have shaped the pretty Speed 6 concept, which many are willing to follow the new Continental (possibly as Bentley’s first EV sports car).

Prior to joining Bentley in 2008, Gregory spent four years as exterior designer at Volkswagen, following completion of a masters degree in automotive design.

He studied in the UK before then, gaining an honours degree in transportation design at the University of Northumbria.

Stefan Sielaff, Bentley director of design, said: “John Paul’s experience at Bentley is invaluable. He brings a passion for the brand and a deep understanding of the direction we wish to go in.

“This is an important time for the company as we look ahead to new models with John Paul, alongside our highly-skilled design team, bringing many insights and ideas to inspire the next great Bentley.”

For his part, Gregory said: “I look forward to helping shape the next chapter and maintaining Bentley’s iconic status as a creator of luxurious, desirable, high performance cars.”

Volkswagen Wolfsburg

Volkswagen halts Golf, Passat production in supply row

Volkswagen WolfsburgSix Volkswagen plants in Germany have been halted due to a row with suppliers that’s stopped the delivery of key vehicle components.

Car production at Wolfsburg, Emden and Zwikau has been interrupted, affecting production of both the Golf and Passat.

Engine, transmission, exhaust, chassis and plastic parts production facilities have also been halted due to the argument with suppliers: Volkswagen says a total of 27,700 employees have been affected.

The German giant has thus imposed “flexiblization” flexible working measures with the workforce that includes short-time work.

Ominously, Volkswagen says a resolution with the suppliers who have halted component deliveries may not come any time soon: “Further developments are not foreseeable,” says an official VW statement.

Currently, short-time working arrangements are in place just for August: the firm will reveal later whether this extends to September.

Thus far in 2016, Volkswagen has retained the title of Europe’s best-selling car manufacturer, with the Golf boasting a commanding lead over its rivals. All eyes will be on VW’s industrial relations team to ensure it can maintain this…

McLaren Automotive

McLaren profits down, investment up in another record year

McLaren AutomotiveMcLaren profits for 2015 fell 66% to just £2.8 million as the automotive firm continued its strategic heavy investment in R&D to fast-track 15 new cars by 2022.

Despite setting a new sales record with 1,654 sales, the McLaren Automotive’s operating profit was down as development costs rose from £91.9 million to £123.9 million.

That’s nearly 30% of revenues, a huge proportion of overall revenue compared even compared to other supercar companies.

Employees also went up by 16% from 1,283 to 1,492 people in a year described by CEO Mike Flewitt as “critical… in the development of McLaren Automotive”.

That’s because McLaren launched the new Sports Series range, headed by the 570S and later joined by the 570GT, a series that “will be pivotal in developing our sales volumes from the 2015 levels of 1,600 to nearly triple that number by 2020”.

Sales are predicted to double in 2016 alone.

But the firm will only achieve this if it continues its heavy investment strategy – and if it remains profitable. McLaren profits of £2.8 million for the year are arguably a bit too close to the line for comfort…

McLaren Track22 strategy

McLaren Automotive

McLaren Automotive plans to continue investing an “industry-leading” 20-25% of its turnover on R&D: over the six-year Track22 business plan, that equates to £1 billion in new vehicles.

Half of the new cars will feature hybrid technology and there may be a future all-electric Ultimate Series successor to the P1.

It’s the Sports Series that will drive volume sales though: McLaren revealed it added a second shift at the McLaren Production Centre earlier in 2016, taking daily production up from 10 cars a day to 20.

The 2015 employee count of 1,492 people has already gone up to around 1,750 with McLaren creating 250 new jobs in the production, quality and logistics department of its Woking HQ.

McLaren also revealed the chairman of a company called McKcal Ltd has overseen a 6.3% investment in the firm, worth £49 million. He’s already well known to McLaren Automotive: he has bought two McLaren P1s and is a McLaren track day regular.

SMMT GREAT BRITAIN

Britain in Brexit car market ‘calm before the storm’

SMMT GREAT BRITAINThe effects of Brexit on Britain’s automotive sector will not be felt until the winter – but it is “difficult to foresee” a situation where both new and used car sales won’t start to drop.

Vehicle data provider Glass’s warns we’re currently in a calm period following the decision to leave the European Union. It will take six months for the full effects to filter through, particularly as the Brexit vote has come in the summer when trade activity is slow.

“The decision to leave has been taken but we have yet to see many material changes,” says Glass’s director of valuations Rupert Pontin.

But the storm is coming, he warns. First, fuel prices are likely to rise due to the fall in the value of the pound. The handover to Britain’s new Prime Minister – now confirmed to be Theresa May – could also trigger a further period of instability; May’s views on when Britain will enact Article 50 to ‘Brexit’ within two years will be important here. 

“Hopefully, from there, we will soon start to see a picture emerging of the timetable for the next few years, which will at least allow dealers and manufacturers to plan more accurately. One of the issues at the moment is the sheer number of unknowns.”

Winter storm

It’s when economic indicators arrive later in the year that Glass’s expects larger scale issues to emerge.

“The next set of indicators is likely to be seen in areas such as retail and the housing market if consumer confidence continues to fall and lenders become more risk averse, making borrowing more expensive.” It’s almost impossible to predict how these factors will impact the car market, says Pontin.

“However, it is difficult to foresee a situation in which the decision to Brexit does not have a negative effect on both new and used car sales in the short-medium term even if, as leave campaigners promised, it turns out to be good for the economy in the longer term.”

The automotive industry should brace itself for the possible storm ahead…

SMMT GREAT BRITAIN

Britain in Brexit car market 'calm before the storm'

SMMT GREAT BRITAINThe effects of Brexit on Britain’s automotive sector will not be felt until the winter – but it is “difficult to foresee” a situation where both new and used car sales won’t start to drop.

Vehicle data provider Glass’s warns we’re currently in a calm period following the decision to leave the European Union. It will take six months for the full effects to filter through, particularly as the Brexit vote has come in the summer when trade activity is slow.

“The decision to leave has been taken but we have yet to see many material changes,” says Glass’s director of valuations Rupert Pontin.

But the storm is coming, he warns. First, fuel prices are likely to rise due to the fall in the value of the pound. The handover to Britain’s new Prime Minister – now confirmed to be Theresa May – could also trigger a further period of instability; May’s views on when Britain will enact Article 50 to ‘Brexit’ within two years will be important here. 

“Hopefully, from there, we will soon start to see a picture emerging of the timetable for the next few years, which will at least allow dealers and manufacturers to plan more accurately. One of the issues at the moment is the sheer number of unknowns.”

Winter storm

It’s when economic indicators arrive later in the year that Glass’s expects larger scale issues to emerge.

“The next set of indicators is likely to be seen in areas such as retail and the housing market if consumer confidence continues to fall and lenders become more risk averse, making borrowing more expensive.” It’s almost impossible to predict how these factors will impact the car market, says Pontin.

“However, it is difficult to foresee a situation in which the decision to Brexit does not have a negative effect on both new and used car sales in the short-medium term even if, as leave campaigners promised, it turns out to be good for the economy in the longer term.”

The automotive industry should brace itself for the possible storm ahead…

Toyota Burnaston

Brexit: Toyota and Unite clear up ‘unfortunate’ confusion

Toyota BurnastonToyota and the Unite union have jointly written to Toyota UK staff to “put the record straight” on Toyota’s position on the UK’s European Referendum – and criticised “unfortunate and repeated misrepresentation” of it by Vote Leave and Leave.EU.

Toyota originally didn’t want to get drawn into the ‘Brexit’ issue and, while this remains the case, it says it’s now essential it clarifies its position given such on-going misrepresentation.

Which is? “Toyota and Unite have said that from the business perspective, we firmly believe that continued British membership of the EU is best for our operations and our long term competitiveness.

“We believe we will face significant business challenges as a result of a decision to withdraw from the EU.” The open letter goes on to list these, with reasons including the simple fact the Burnaston and Deeside plants were originally built in the UK to make cars and engines for Europe

Open, free access to the EU is of “critical importance” to the business, says Toyota: 90% of British-built vehicles are exported – and 75% go to Europe, where there are no tariffs or duties.

“If the UK leaves the EU, we think it unlikely that the UK can keep the current trading arrangements… this would mean we would have to pay duties on cars. This could be as much as 10% for cars, leading to either huge cost reduction challenges for us or more expensive cars for our customers.

“New trade agreements may be negotiated but these take many years to agree and the outcome is also uncertain, however we do know that they cannot be better than what we have now, 0% for our main European markets.”

Toyota still doesn’t take an official position in the letter, simply advising staff to “vote as you think is right”. But anything that adds to the cost and complexity of building in Britain, it says, “will make it harder for us to compete and win new business”.

It may not be an official position, but it’s still clear what outcome Toyota and Unite are hoping for on Thursday…