Report Points to New Opportunities for U.K. Suppliers

There’s an extra £3 billion ($4.7 billion) up for grabs in the U.K. automotive supply chain.

A new survey by the Automotive Council shows the purchasing budget of 14 automobile, engine and construction-equipment makers that responded to the survey is £23.6 billion ($37 billion) this year, up from £20.6 billion ($37 billion) in 2011.

The council says that with auto makers spending a third of this figure, £8.4 billion ($13.2 billion), on local suppliers and actively wanting to buy more in the U.K., the survey looks at where domestic companies can win a bigger share of the business.

Sourcing opportunities span the range of vehicle components from high-value forgings and castings to consumables such as batteries or interior parts.

The U.K. produces 2.5 million engines a year. One of the biggest opportunities identified by value is engine parts at £540 million ($847.3 million), the council says.

Council Co-Chairman Vince Cable says increasing capacity in the automotive supply chain or bringing work back from overseas is a priority.

“The strength and depth of the supply chain has not been keeping pace with the level of investment we’ve recently seen by vehicle manufacturers in the U.K.,” he says in a statement.

Office of National Statistics trade figures show the U.K. exports £4.7 billion ($7.4 billion) but imports £10.8 billion ($16.9 billion) of auto parts.

Co-Chairman Richard Parry-Jones says the survey also shows the increase in low-carbon vehicles on the roads is creating new supply-chain opportunities as well. “Capability assessments show that U.K. technology providers are well-placed to benefit from this growing demand, particularly in areas such as energy storage and intelligent mobility." 

The Society of Motor Manufacturers and Traders says the survey identifies a wide range of auto makers’ commodity requirements. It says engine castings and forgings, steering systems, trim interiors, vehicle upholstery, electronics and tires are some of the components in greatest demand by domestic vehicle manufacturers.

“For some of the most highly sought-after components, significant supplier capability already exists in the U.K., but for others, continued inward investment is required to ensure that U.K. suppliers can meet demand and close these valuable sourcing gaps,” CEO Paul Everitt says in a statement.

“A strong and successful supply base is essential to ensuring the future prosperity of the wider automotive industry.”

Everitt says the Automotive Council will pursue the $3 billion (£4.7 billion) of new business opportunity cited in its survey, raising awareness of the scale of demand and facilitating engagement with potential suppliers. “These will include existing U.K.-based automotive suppliers, domestic suppliers in other sectors looking to enter the automotive market and overseas-owned companies and investors.”