NAA Update: Trump’s tariffs are the latest addition to a range of challenges for the UK automotive industry
President Trump’s confirmation of 25% tariffs on cars imported into the US is yet another challenge that UK manufacturers need to add to their ever-increasing list. North America is a key market for many manufacturers from the Northern region, including Bentley, JLR and McLaren.
A seismic week for the global economy with President Trump outlining his long-promised tariff policy. Starting already, the UK, like many other countries, will face a 10% tariff – the minimum levied – on most exports across the Atlantic. Whilst charged less than other major economies, it is another deeply disappointing and potentially damaging measure, and will affect a wide range of automotive products. However, the most severe pain in our automotive sector is now likely to be felt by those attracting a 25% tariff on top of the existing duties, including car manufacturers and, from 3 May, the vast majority of car part suppliers.
We hope a deal between the UK and US can still be negotiated to reduce or even remove the tariff and recognise that the Government continues to work hard to secure such a deal. The industry is already facing multiple headwinds and this announcement comes at the worst possible time. SMMT is in constant contact with government and will be looking for trade discussions to accelerate as we need to secure a way forward that supports jobs and economic growth on both sides of the Atlantic.
A collaborative approach to both industrial and trade strategies will make the UK automotive industry stronger but so too does having thriving domestic vehicle markets. The UK’s new car registration figures, published this week by SMMT, show a mixed picture. Last month’s ‘new numberplate’ March – the most important month of the year for the new car market – saw the highest demand of any March since 2019. It was also the best month ever for EV uptake, driven in part by some natural growth but also by unsustainable manufacturer discounting and shrewd buyers seeking to switch ahead of new tax disincentives. Even so, uptake was still less than 20% of the overall market, some eight percentage points behind the UK’s mandated targets for this year in what is the biggest volume month. Looking ahead, with the VED Expensive Car Supplement now applicable to BEVs, the market now faces further challenges just when we need every encouragement for consumers, particularly EV sceptics, to switch.
In more positive news, the government has announced changes to the Zero Emission Vehicle (ZEV) Mandate. The 2030 phase-out date of new petrol and diesel car sales will remain, but hybrid cars and ICE vans can now be sold until 2035, there will be increasing ‘flexibilities’ within the mandate, and small manufacturers will be exempt.
The updated ZEV Mandate includes:
• Allowing hybrid cars – full hybrids and PHEVs including the Toyota Prius and Nissan e-Power – to be sold until 2035 – the government says “to help ease the transition and give industry more time to prepare”
• Fines for failing to meet ZEV Mandate targets will be reduced from £15,000 to £12,000 per vehicle
• Vans with an internal combustion engine (ICE) will also be allowed to be sold until 2035, alongside full hybrids and plug-in hybrid vans.
Manufacturers such as Bentley, McLaren, Aston Martin, Lotus and Caterham will be exempt from the 2030-2035 hybrid requirements, with small volume manufacturers (as opposed to micro volume manufacturers) being required to meet a ‘nominal’ reduction in CO2 across their fleets after 2030 ‘which will be agreed with them’.
There will also be increasing flexibilities within the mandate for manufacturers up to 2030, so that more cars can be sold in later years when demand is higher.
Moving on to the membership side, we welcome one new member this month:
Wincanton – Wincanton provides business critical services for many of the best-known brands and organisations. Services include transport management and optimisation, dedicated and shared-user warehouse storage, handling and distribution; customer fulfilment centres, high volume eFulfilment; two-person home delivery; and network optimisation.
We will hear more from our new members in the coming weeks.
Finally, if any of your colleagues aren’t receiving this e-news, and you think it may be of interest to them, please ask them to sign up with Zoe.
Paul Jones
NAA CEO
