SMMT highlights £74bn opportunity

A new SMMT report is calling on government and the automotive sector to grasp the £74bn opportunity from digital manufacturing.

The Society of Motor Manufacturers and Traders (SMMT) new report highlights a £74 billion opportunity for the UK if the industry fully embraces digitalisation over the next two decades.

The Digitalisation of the UK Automotive Industry, commissioned from KPMG, examines the future of digital manufacturing – sometimes known as the fourth industrial revolution – and outlines the benefits for the industry, consumers and the wider economy, as well as highlighting the potential challenges the UK sector must overcome. Alongside the ongoing development of ultra-low emission and connected and autonomous vehicles, the transition to digital manufacturing represents the biggest step change for automotive manufacturing since the introduction of automation in production lines in the 1960s.

By embracing digitalisation, the automotive manufacturing sector as a whole stands to gain £6.9 billion every year by 2035, with a cumulative benefit to the wider economy of some £74 billion. This is a significant prize, but there are challenges to be overcome by industry and government, if it is to be realised. The UK’s digital infrastructure needs to be improved, the skills gap addressed and investment in digitalisation accelerated, while clear policies on cyber security and standards for data sharing must be developed to promote trust.

SMMT is calling for government to support this work and ensure the UK remains a major global manufacturing destination, by putting digitalisation at the heart of industrial policy. Other countries have taken the lead. Germany was the first to adopt a digitalisation strategy, Industrie 4.0, led by Chancellor Angela Merkel, while in the US, the Industrial Internet Consortium is funded with US$1 billion. These countries are already collaborating on standard setting and Japan will soon launch a similar Industrial Value Chain Initiative.

Mike Hawes, SMMT chief executive, said, ‘We may only be at the beginning of a new industrial era but with innovation and continuous improvement part of the automotive sector’s DNA, we are well placed to embrace the opportunity.’

John Leech, head of automotive for KPMG in the UK, said, ‘The UK automotive industry is already the most productive in Europe but faces increasing competition from lower cost countries and uncertainty following the UK’s vote to leave the EU. The application of digital technologies to the design and manufacture of vehicles will help to secure the industry’s competitiveness in the decades to come.’