New research, commissioned by Wyelands Bank, reveals that three out of the top five fastest growing markets for the UK automotive sector are outside Europe. These markets include the USA, Japan and Australia where UK exports are growing at 4.3%, 3% and 2.6% respectively.
The Netherlands and Italy make up the remaining top five where exports are expected to grow at 4.3% and 2.1% per year to 2021.
In all, automotive exports to these five markets were worth $17.9bn last year. The projected growth could generate an extra $677.7m a year for UK exports to 2021.
At $54.7bn the automotive sector is the second largest export sector by value in the UK behind machinery and components, at $55bn. Automotive exports as a whole are expected to grow by more than 1.7% annually to 2021. This makes the UK the fourth fastest growing automotive exporter globally, behind Mexico, China and Spain respectively.
Companies in the UK automotive industry account for £104bn in turnover, created nearly 340,000 direct jobs and a further 814,000 in the whole sector value chain in 2017.
Overall, automotive exports were worth $54.7bn in 2017, nearly half a billion more than in 2016.
Iain Hunter, CEO at Wyelands Bank, said: “As the UK’s second largest export sector, automotive manufacturers are an important source of export growth to 2021. What’s more, given 58% of companies in the automotive sector are SMEs, we can see how important SMEs are to UK trade.”
UK automotive imports were worth $85.6bn in 2017 – an increase of more than $5bn from 2016. The UK imports an estimated 42% of the value of the cars it exports and has a large trade deficit in the automotive sector.
Looking at components in more detail, the UK has a trade deficit in gear boxes, dashboards, brakes, windscreen glass, rev and speed monitors, and bumpers and bumper parts. Only in radiators and engines does the UK export roughly what it imports.
The situation is similar for powertrain and assembly components where the UK has a deficit across all areas other than car seats where there is a modest surplus. Parts in deficit are safety belts, chassis with engines, silencers and exhausts, car bodies, suspension and shock absorbers, tyres, steering wheel and columns, and drive axels.
More widely, trade accounts for 58% of UK GDP. This makes the UK economy one of the most open in the G20, and more open than China, America and Japan. In 2016, the UK exported goods worth US$433.5bn and imported goods worth US$678.1bn.
Looking at the regional picture for UK exports, Europe remains the UK’s biggest trading partner for exports with a 46.3% share. North America is next with 17.2%, while Asia Pacific (7%), Sub-Saharan Africa (5.4%), Mena (1.8%) and South America (1.2%) follow.
However, the fastest growing market is Asia Pacific, where UK exports are expected to grow at 3% a year to 2021 and South America, where this is expected to grow by around 0.5% annually until 2021.