North West automotive manufacturers to diversify international targets after Brexit

The North West’s automotive manufacturers remain resilient despite ongoing market uncertainty, according to new data.

In its third annual report on the UK automotive sector, Lloyds Bank Commercial Banking found that car makers’ growth and investment plans are on track.

The research found that North West manufacturers’ average investment in the next two years will be 22% of turnover – the same figure given in last year’s report.

The region’s manufacturers are forecasting higher turnover growth (of 16%) over the next two years than rest of the country (15%).

Exactly half (50%) of the North West respondents have forecast growth to stem from existing product development.

According to the Lloyds data, Britain’s departure from the EU remains the biggest threat on the horizon, with over one in four (27%) of automotive manufacturers considering Brexit to be a looming challenge for the industry.

Despite the potential difficulties of Britain’s future relationship with the trading bloc, North West manufacturers are expecting some benefits from Brexit, citing less bureaucracy and regulation (73%), more competitive exports due to the ongoing weakness of the Pound (40%) and improved international trade agreements (40%) as potential upsides.

The research has also discovered that North West automotive firms are keen to pursue international opportunities during the next two years. Almost two thirds (60%) plan to invest in or engage new international customers.

However, the number of car makers in the region targeting new customers in Western Europe dropped to 67%, down from 75% in last year’s report. Those targeting North America, which is the biggest single market for UK-made cars after Europe, leapt from 42% in 2016 to 78%.

Companies in the North West intend to diversify their international targets, with the number of firms looking at Russia up from 25% to 56%, at South America from 8% to 45%, Far East/Asia from 25% to 44%, Africa from 25% to 33%, and the Middle East from 17% to 22%.

Lloyds Bank Commercial Banking’s head of manufacturing, David Atkinson, said: “The automotive industry remains the UK’s largest manufacturing export sector with a national supply chain and a presence in every UK region, including the north west.

“This report highlights an industry looking to the future, eager to put any uncertainty generated by the EU Referendum behind it.”

He continued: “However, much rests on the nature of the UK’s future trading relationships with some firms continuing to put plans on hold as they await the full details of Britain’s exit from the EU.

“As the industry continues to experience its biggest period of transition for a generation, Lloyds Bank is well placed to support the sector’s plans and investment in new technology, as part of our Helping Britain Prosper plan.”

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