On a global scale, the automotive industry is a giant and is one of the largest sectors in the UK, which provides around £15.3 billion towards the UK economy. However, like many other industries, the last 12-18 months have really impacted this sector, especially in the UK, with Coronavirus and Brexit hitting the market hard.
For the UK, over the past year we have already seen the industry impacted due to Brexit, with some of the largest automotive manufacturers declaring that they would potentially move elsewhere if a hard Brexit occurred. But not everything should be doom and gloom, as the industry is expected and predicted to begin climbing again, as after all, 2020 was a difficult year for most sectors and countries.
Duncan Anderson, CEO at Tickmill commented: “There’s been a real transformational shift in the trading industry that has given investors access to markets they wouldn’t have had back in the day and I really think in the future, these markets are going to increase exponentially.”
Because of this increased access and ease of trading overseas, it has provided a lot more opportunity and interest in the automotive and retail industry on a global scale and encouraged investors to look beyond how the sectors were hit financially last year. Everyone is now looking towards the future, which will further increase the interest and investment.
Automotive sales slumped but positivity around electric vehicles
In 2020 alone, UK automotive sales dropped by 30%, which was the lowest for 30 years, with the pandemic being the main source of impact. It wasn’t just the UK that was hit by a reduction in automotive sales, however. On a global scale, car sales in 2020 dropped to 63.8 million from 74.8 million and is expected to begin climbing slowly again in 2021.
Whilst petrol and diesel sales slumped in the UK, with sales down 39% and 50% retrospectively, electric car sales actually increased with an increase of 185.9%, indicating that though issues were around the automotive industry, peoples interests are changing towards a much greener alternative, which will bring investment and an increased trade with it.
What trade deals have been positive?
Thankfully, for the UK there was a trade agreement back in December 2020 which was great news for the automotive sector, which means that goods, (including cars), are now able to be traded freely between the UK and EU. This is a great way for the UK to ensure that the automotive industry isn’t hit by the implications that were being discussed prior to this agreement.
In reference to the recent agreement, Felipe Munoz of Jato Dynamics commented: “The UK is one of the world’s top 10 biggest markets by volume. Just because it’s no longer part of the EU, it doesn’t mean that the customers will no longer buy cars produced in that country.” Thanks to the agreement, I can’t see why the UK won’t get investment.”
Even though 2020 was a difficult year, it is predicted that the automotive market will begin to pick up pace again and with the trade agreement and increase of electric car sales expected, investment in the sector both in the UK and globally is looking to continue.