Cooke points to new production facilities coming online in South America, the Far East, Eastern Europe and Russia, as well as existing plants in China and Thailand that are now looking to export.
Cooke explains that BMW and Japanese car companies operating in the UK have “very strong” product line-ups and are likely to know where these vehicles will be sold. In addition, cars coming out of the UK have an advantage in that they tend to have higher specifications, he says. “But the UK manufacturing 2 million cars – at what price and how profitable are these going to be?” he cautions.
Across the Channel in France, PSA Peugeot-Citroën is struggling to compete in the European car market. In July, it announced the closure of the country’s largest car plant at Aulnay-sous-Bois, north of Paris, slashing 8,000 jobs. A further 5,000 jobs will go at its other French sites, including 1,400 at a factory in Rennes, after sales slumped in recession-hit south Europe. Peugeot-Citroën sales plummeted 20% in Europe in the first quarter of this year, and the company has warned that it faces a first-half loss of £553 million this year.
Despite the concerns that such news engenders, Cooke says that UK manufacturers are producing “superb quality” vehicles and have a well-trained and motivated workforce. He sees the headline investments as great news but believes the money is being spent to keep existing products fresh rather than creating any “huge new exciting” ones.
He says that new products are changing faster than ever before, and that there are all sorts of new players coming into the marketplace. Companies such as Kia and Hyundai are offering “amazing value products”. If manufacturers are not changing their products on an increasingly frequent basis, they are going to miss out, he says.
BMW recently announced a £250 million investment for the production of the Mini in the UK. As part of the spend, the company will produce 10 new models of the car. Cooke says: “BMW are trying to keep the iconic brand moving forward. Even a best-selling product like that has got to keep up to date.”
Another UK-based manufacturer that is developing models and updating existing ones is Nissan. Last year its Sunderland plant produced 480,000 cars, up from 330,000 10 years ago. The turning point came in 2007 when Nissan introduced the Qashqai – the company’s highest-selling vehicle in Europe ever. From then on production volumes began rising steadily and continued to climb with the introduction of another model, the Juke, in 2010.
Outputs look set to increase further still. Kevin Fitzpatrick, Nissan’s vice-president for manufacturing in the UK, says that next year the plant hopes to move to three shifts on the assembly line as the replacement for another UK-made model, the Note, is introduced. This will take production to 550,000 units and create jobs.
But all this growth does not come cheap. The company has pledged in excess of £921 million investment in recent years. Fitzpatrick says: “We have done a lot of work to improve our cost performance and efficiency. Also we demonstrated that we are capable of producing high volumes, so investing in us is quite sensible.” The Sunderland factory has upped its game in terms of manufacturing performance, productivity and quality.
As part of the multi-million pound spend, Nissan is gearing up to produce a new electric Leaf model from 2013. The company received money for the project from the government’s Regional Growth Fund. Fitzpatrick says: “In an environment where you are competing against other plants, government support does make a big difference.”
Globally, Nissan is aiming to increase its industry share from 5.4% to 8% by 2016, and its plants will expand to accommodate that growth. Fitzpatrick says: “If you design a car that people want to buy that is at the right cost and quality then you will sell a lot, and that is what we plan to do.”
He adds that carmakers should not get complacent. The industry must continue to challenge costs and quality and to make innovative, attractive products. “If you look at ourselves and the other companies in the UK that are growing, it has predominantly been because the products are desirable and the plants that they are built in strive to improve their competitiveness. There is no magic to it.”