The last year has been an eventful one for car makers generally and, more specifically, the UK car industry
James Attwood, digital editor
23 December 2019

The car industry has always looked ahead, but it has never been more focused on the future than it is right now. It is a time of unprecedented change, with electrification, legislation, autonomy and other new technology set to profoundly affect the way cars are built, powered, driven and sold.

During 2019, we’ve had glimpses of that future, with the launch of models such as the Porsche Taycan, Volkswagen ID 3 and Peugeot e-208 and the arrival in Europe of the Tesla Model 3.

Those machines show the future is bright: the problem is that it’s not here yet. But the disruption being caused by all that change – and several other factors – is and was reflected in the turbulent state of the car industry in 2019.

Here are the big issues that dominated the motor industry this year.

Uncertainty hits car sales

Analysts expect more than three million fewer new cars will be sold globally this year than in 2018. In the UK, year-on-year sales were down 2.7% at the end of November. There are multiple reasons for the decline, with the economic slowdown and consumer uncertainty playing key roles, exacerbated in the UK by the ongoing drama over Brexit.

The continued decline of diesel, accelerated by the increasing prospect of anti-diesel legislation, was also a major reason for the fall. Sales of diesels fell more than 22% year on year in the UK – hitting firms with a heavy reliance on those engines, such as Jaguar Land Rover (JLR).

Another key concern was the continued struggle of China: sales in the world’s biggest car market were down more than 12% year on year, not helped by trade tensions between China and the US.

Emissions testing and targets

The impact of tougher WLTP emissions tests introduced in late 2018 carried into this year and several firms had to temporarily pull certain cars from sale due to backlogs in getting cars certified under the new system.

The bigger challenge the industry had to face up to this year was preparing for the introduction of the EU’s 95g/km CO2 fleet emissions target in 2020. Those targets will be impossible to hit using purely combustion-engined cars and, with sales of fully electric vehicles yet to pick up, that led to a huge push of hybrid cars.

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There will be massive fines for missing those targets, so expect disruption in the availability of certain models as firms take action to adjust the average CO2 emissions of their fleet during 2020.

The challenge of electrification

That turmoil comes as firms are having to invest heavily – we’re talking billions of pounds here – in future technology. Electrification is coming: legislators and an increasingly environmentally conscious public demand it.

Car firms are having to develop electrified powertrains and overhaul their production facilities – and, in some cases, substantially reorganise their entire business operations. They also need to invest in autonomous, digital and connected technology.

That investment is needed today, but the pay-off won’t be immediate: EVs accounted for less than 2% of new car sales in the UK in 2019. That figure will rise sharply in years to come as an increasing number of EV models are launched – although it’s clear that the public still needs some convincing to make the leap.

There’s also the question of where those cars will be charged, with the growth of fast-charging networks not reflecting the pace of EV development – and manufacturers, governments and charging firms debating who should be responsible for funding the expansion that’s required.

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Partnerships and mergers

The huge investment needed in future technology led to another big trend of the year: partnerships. Companies can’t fund all that development by themselves and are increasingly sharing the cost.

Toyota has secured a string of deals with other Japanese firms, including Mazda, Suzuki and Subaru, to team up on EV development. Ford has agreed deals with rival Volkswagen and start-up Rivian to build future EVs on those firms’ platforms. JLR and BMW are co-operating on electric motor development. Even BMW and Mercedes-Benz, long-time head-to-head rivals, are working together on autonomous technology.

The quest for economies of scale also drove a push for numerous firms to investigate combining forces in formal mergers. The PSA Group reportedly looked at buying JLR; and Groupe Renault and Fiat Chrysler Automobiles (FCA) held merger talks. Neither came to fruition but did point to the biggest story of the year: the agreement of FCA and PSA to merge. The deal, still awaiting final approval, will create the world’s fourth-largest car firm.

Manufacturing in the UK

It was a tough year for car manufacturers in the UK. Falling sales led to falling production, while firms were also forced to invest time and money on Brexit contingency measures for several scheduled (and delayed) dates for the UK’s exit from the EU. The lack of an agreement between the UK and EU meant firms spent much of the year not knowing how cross-border trade would work.

That uncertainty came on top of already tough conditions. Honda announced it would shut its Swindon factory, with Ford closing its Bridgend engine plant. Nissan shifted plans to build the next-gen X-Trail away from its Sunderland site and the long-term future of Vauxhall’s Ellesmere Port plant remains uncertain, particularly in the wake of the PSA-FCA merger.

Those various struggles are all for numerous different reasons, but all combined to make it a tough year.

The outsiders: the new firms trying to disrupt the industry

Thanks to ever controversial boss Elon Musk, Tesla is rarely far from the headlines – and it again attracted plenty of attention in 2019.

Questions over Tesla’s financing, stock value and long-term future remain, but the firm had a good 2019: Model 3 sales were strong and the first examples reached the UK and mainland Europe; it unveiled the Model Y SUV and Cybertruck; and it started work on a pivotal Shanghai factory.

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But it wasn’t the only EV start-up to attract attention. Nio has often been described as the Chinese Tesla and it lived up to that billing in 2019 by expanding its range of premium EVs while investors questioned its financial viability.

Rivian has yet to launch its first model, but the start-up secured huge deals to supply platforms to Ford and build delivery vehicles for Amazon. It’s definitely one to watch in the years ahead.

Meanwhile, much was expected of billionaire inventor James Dyson’s promised ‘groundbreaking’ EV – but he canned the project late in the year after failing to find a way to make it financially viable.

2020 foresight, what to watch for next year

Electric cars: Manufacturers expect the arrival of a host of mainstream, relatively affordable electric cars to send sales surging. But will customers overcome their range anxiety and start buying them?

The FCA-PSA deal: Pending approval, expect swift moves as the Franco-US-Italian giant starts to act on its new-found scale. Could the next Fiat 500 be shifted to the Peugeot 208 platform?

Brexit: We should finally get some clarity – but the impact on the car industry is likely to be substantial.

Tesla (again): Industry disruptor and Tesla CEO Elon Musk shocked the world with the Cybertruck – and Tesla will surely continue to have an impact on the industry far beyond its size.

READ MORE

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Analysis: Tesla is making progress but still faces challenges

Analysis: the numbers behind the FCA and PSA merger

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Comments
5

23 December 2019

Brexit is killing off UK car manufacturing.

?

Mercedes was going to do a joint venture with Nissan in Sunderland, but pulled out because of Brexit.

?

Nissan moved production of the X-Trail because of Brexit.

?

Honda is pulling out of Britain because of Brexit. ? They had ships with the equipment needed to update Swindon on route to the UK and got them to turn back. ? They're instead building in a high-cost country with labour shortages.

?

Vauxhall have already warned they'll pull out because of Brexit.

?

Ford, well, this is the one that's probably not due to Brexit but they might have got an update to keep going if it weren't for Brexit.

?

Even JLR has moved more work to Slovakia because of Brexit.

?

BMW? ? Moving more production to their EU plant rather than continuing to expand their Mini operations.

?

Brexit is turkeys voting for Christmas. ? If you voted for it, you can own it. ? Admit you're making others poorer, you're taking away their freedoms, you're reducing their rights, you're putting them out of a job.

?

23 December 2019

It's over mate. I'm emigrating, myself - company arranging a transfer to their offices in Berlin. Won;t be looking back. B*****ks to brexit britain.

23 December 2019
Symanski wrote:

Brexit is killing off UK car manufacturing.

?

Mercedes was going to do a joint venture with Nissan in Sunderland, but pulled out because of Brexit.

?

Nissan moved production of the X-Trail because of Brexit.

?

Honda is pulling out of Britain because of Brexit. ? They had ships with the equipment needed to update Swindon on route to the UK and got them to turn back. ? They're instead building in a high-cost country with labour shortages.

?

Vauxhall have already warned they'll pull out because of Brexit.

?

Ford, well, this is the one that's probably not due to Brexit but they might have got an update to keep going if it weren't for Brexit.

?

Even JLR has moved more work to Slovakia because of Brexit.

?

BMW? ? Moving more production to their EU plant rather than continuing to expand their Mini operations.

?

Brexit is turkeys voting for Christmas. ? If you voted for it, you can own it. ? Admit you're making others poorer, you're taking away their freedoms, you're reducing their rights, you're putting them out of a job.

?

A lot of what you said is nonsense, the only xtrail built in the uk was the diesel, the petrol was always built in Japan. That the diesel isn't being built at all is nothing to do with brexit.
Honda's failing sales have caused their restructuring, that and they can build for UK and EU in Japan with the new trade deal.

Whether you like it or not it is happening, it's what happens next that matters but stop blaming everything on the decision to leave the EU, a lot of the issues have been caused by the uncertainty surrounding it which is down to our useless politicians.

23 December 2019
Not sure the taycan has set the bar high for EVs or that the id shows the future of mainstream EVs,both those quotes could be levied at Tesla more accurately though Peugeots 208 and Renault's new battery lease less Zoe are also excellent examples of mainstream and don't forget the leaf.

24 December 2019

very few of the closures and production capacity reductions have been attributed by the manufacturers to Brexit, although some have been speeded up due to the uncertainty. Remember, we don't know what the trading terms will be after the transition period, so nothing has actually changed yet.

The truth is that the world needs less car production than European manufacturers hoped and their goal of ever expanding volumes was seriously flawed, particularly with new Chinese competitors and innovators like Tesla adding to the overall numbers.

Added to that, many factories in Britain have been on the edge of economic viability for decades, Ellesmere Port is a perfect example but also Honda and Nissan. Note that Toyota and Mini aren't going anywhere, and Mini and Jaguars moves to expand production into Europe, would have happened with or without Brexit, for lower costs.

Ranting over the various positives and negatives of Brexit needs to stop now. That ship has sailed. I fear the consequences of a bad (or no) trade deal as well, but that has yet to be decided.

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