The UK Automotive Industry: Trends and Technologies Shaping the Sector
With advancements in technology and new trends emerging, it is no secret that the UK automotive industry grows year upon year. In June 2023 the UK automotive industry recorded over 177,000 new car registrations, representing a 25.8% year-on-year increase, marking an eleventh consecutive month of growth, as reported by the Society of Motor Manufacturers and Traders.
The UK automotive industry is an important part of the UK economy, as it provides integral support for levelling up, net zero, advancing the UK economy and planning for growth. The UK automotive industry reported that manufacturing contributes a £67 billion turnover and £14 billion value added to the UK economy. The industry invests around £3 billion each year into research and development.
We take a look into the UK automotive industry at a glance, discussing new trends, technologies and what to look out for in 2023.
Technology in the automotive sector is creating opportunities that allow for innovations and the development of more efficient vehicles.
In 2030, the UK will be preparing itself for the 2030 ban on new petrol and diesel car sales, there is a high demand from consumers for electric vehicles that will continue to increase throughout 2023.
The International Energy Agency predicts that electric car sales will continue to grow through 2023, with them expecting 14 million sales by the end of the year. The shift towards electric vehicles will have implications on energy markets and climate goals, as unions are starting to look at passing legislations to match their electrification and battery manufacturing demands.
Electric vehicle shipments are expected to grow at 17.8% on a year-upon-year rate. The consumer electric vehicle market in 2023 is nearly four times larger than what it was in 2020, which states that there were only 1.4 million electric vehicle sales.
AI is slowly being incorporated into every aspect of our lives, so eventually it would make its way to the automotive industry. AI includes components such as Machine Learning (ML), Deep Learning (DL), and Computer Vision, performing various robotic automation in the automotive industry.
AI brings several benefits to both automotive manufacturers and consumers. It aids in fleet management, guides autonomous vehicles, enhances driver safety, and assists in vehicle inspection and insurance. companies can optimise mass production, ensuring high quality while reducing manufacturing costs.
Implementing AI in the automotive industry requires a well-trained workforce, robust data security measures, costly infrastructure, software, and other considerations. One of the key challenges is tailoring AI solutions to meet the demands of diverse markets with varying demographics, languages, and cultures.
it is anticipated that there will be a significant need for AI within the automotive sector in 2023 and the years to come.
Trends to look out for in the automotive industry
Digital Customer Experience:
The way consumers interact with the automotive industry is transforming consumers to seek personalised and digitally-driven experiences.
A significant trend among car buyers aged 45 and below is that they are more inclined towards sales and services that minimise physical contact. A survey conducted by Visartech indicated that approximately 60% of this demographic expressed interest in purchasing their next vehicle through online channels.
To be able to cater to this evolving consumer demand, automotive companies are leveraging the potential of customised vehicles with WebGL, an emerging technology. This innovative approach enables these companies to provide tailored customer experiences. By utilising advanced 3D modelling techniques, WebGL creates visually captivating car exteriors.
WebGL proves valuable even before the production phase begins, as it allows automotive manufacturers to design diverse components, including customised car accessories.
Enhanced Vehicle Connectivity:
A new trend taking on the automotive industry is Enhanced Vehicle Connectivity. This requires integrating technology into vehicles to allow them to establish communication channels with drivers and the external environment. Different technology solutions will power Enhanced Vehicle Connectivity, these are:
- Advanced Driver Assistance Systems – to enhance driver safety and comfort by using lane keeping, adaptive cruise control and automatic braking. ADAS systems can improve vehicle safety significantly.
- User Applications – this is a software program that offers features related to the vehicle, this can range from navigation to parking assistance to entertainment options.
As Enhanced Vehicle Connectivity emerges as a new trend in the automotive industry, the integration of technology into vehicles is set to revolutionise the driving experience.
In 2023, self-driving cars have become more common, with Tesla and Google having already showcased their autonomous vehicles back in 2014. Despite their capabilities, these cars still face various challenges and limitations. They are currently only able to operate in specific regions like the US and the UK, leaving off-road routes unexplored.
Autonomous driving and driver assist technology is transforming the automotive industry. These advancements offer drivers a more comfortable and safer experience on the road. By using the power of AI algorithms and sensors, these technologies enable the detection of objects, efficient navigation through traffic, and swift decision-making. As a result, the occurrence of accidents is reduced, while overall efficiency is enhanced.
Automotive Industry Facts
- 182,000 people employed in automotive manufacturing
- 780,000 people in total are employed across the wider automotive industry
- 130+ countries importing UK-built vehicles
- 25 manufacturers build more than 70 vehicles in the UK
- 1.5 million engines were built in the UK in 2022
- 40.5 million vehicles on UK roads
Outlook for the next year
Looking ahead to 2023, the automotive market is expected to encounter a variety of challenges that will demand strategic solutions and adaptation. One of the main challenges is that the UK automotive market needs to navigate the instability of raw material prices. Decreases in the prices of essential resources like steel, aluminum, and petroleum can impact production costs, supply chains, and the pricing of vehicles. Manufacturers and suppliers will need to develop strategies to decrease the impact of these price fluctuations.
Automotive companies must stay alert to the evolving concerns of consumers. Inflation, rising food prices, and escalating energy costs, as they continue to be sources of worry for individuals and households. These financial pressures will inevitably influence consumer behaviours, including their purchasing decisions in the automotive sector. With a desire to mitigate costs, consumers will seek out more cost-effective vehicle options that offer fuel efficiency, affordable maintenance, and long-term value.
The automotive market is experiencing a notable shift towards sustainability and environmentally friendly alternatives. Regulatory requirements aimed at reducing carbon emissions and combating climate change are becoming more important, which will prompt automotive manufacturers to prioritise the development and production of greener vehicles. Brands that proactively address these sustainability goals by introducing innovative, low-emission vehicles or embracing electric and hybrid technologies will not only meet requirements but also tap into a growing market segment.
The MAKE UK Manufacturing Outlook 2023 Q2 has forecasted that there will be 4.4% growth in 2023 with employment also growing this year by 1%.
In a survey conducted by Autotech Recruit permanent recruitment still remained at the top solution for 76% of businesses.
Automotive manufacturers have stated their commitment to addressing staff shortages through a combination of different approaches. Manufacturers plan to enhance their workforce by leveraging skilled freelance technicians and MOT testers, seeing a significant increase of nearly 15% compared to last year, to fill resource gaps efficiently. Manufacturers aim to create opportunities for young talent through apprenticeships and internship programs.
The survey stated that 65% of these manufacturers have acknowledged the paramount importance of carving out career paths for young individuals as a pivotal aspect of their recruitment strategies.
The Other Transport subsector, which includes aerospace, defence, shipping, and rail industries, experienced a stagnant forecast in the first quarter of the year as reported by Make UK (Manufacturing Outlook 2023 Q2). It has now been revised upwards to indicate a 2.3% growth in output for 2023. There are even more promising prospects for the following year, as it is expected to witness a significant growth rate of 3.2% in 2024.
Employment within this subsector is projected to see equal measures of growth and decline. For this year, a 1.1% expansion in employment is forecasted, whereas in 2024, it is expected to contract by -1.1%.
Automotive manufacturers must adapt to survive and thrive in the automotive industry, which is undergoing substantial changes due to evolving consumer preferences and the prevailing economic conditions. It is imperative for automakers to closely monitor automotive trends and thoroughly explore the factors that drive them.