The report, Growing the Automotive Supply Chain – Local Vehicle Content Analysis, shows that 44% of all components used by UK carmakers now come from domestic suppliers, compared with 41% in 2015 when the study was last carried out.
In 2011, local vehicle content stood at 36%, which itself was an improvement following years of decline in UK automotive manufacturing.
Mike Hawes, SMMT chief executive, said: “The domestic supply chain is the backbone of UK Automotive and its health is crucial to the success of the whole sector.
“While it is good news that British cars are becoming more British and re-shoring efforts are enjoying success, the process takes considerable time.
“To grow our supply chain further, the long-term competitiveness of the UK must be maintained.
“Collaboration with government has been an undoubted factor in the recent success and we hope to continue this approach to ensure the economic and trading conditions we currently enjoy are maintained.”
British car manufacturing hit a 17-year high in 2016 with more than 1.7 million vehicles made and, since 2009 when the Automotive Council was formed, production has risen more than 72%.
Another measure of success is the amount of locally sourced parts and components used in vehicle manufacturing, because much of the sector’s value added is created at the start of the production process.
Exhausts, large pressings, small pressings and plastics have all enjoyed growth, though opportunities to increase production capacity in these commodities, and others, remain.
When combined with the increase in the proportion of parts sourced locally, it means domestic suppliers have increased their output by 60% since 2011.
Increasing the British supply base in this way offers benefits to the UK’s vehicle manufacturers, says the report.
Sourcing from UK suppliers reduces time and cost of supply chains, reducing the risk of delays which can halt production.
Growing local content – and thus the domestic supply chain – also helps increase the attractiveness of the UK as an inward investment destination as a healthy supply chain is a pre-requisite of vehicle production location decisions, it added.
Furthermore, if the industry is to take advantage of beneficial trading terms included in free trade deals, originating content must meet minimum rules of origin thresholds else reduced tariffs may not apply.
The study, Growing the Automotive Supply Chain – Local Vehicle Content Analysis, was released today at the ninth SMMT International Automotive Summit.
The event brings together industry, government and the media to discuss and debate the opportunities and challenges facing the industry.
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