Global volatility UK plc, warns Cap HPI
Global volatility is posing a significant threat to the UK automotive industry, and the Labour government is exacerbating the challenges with ‘strange’ policies.
This is according to the latest global economic outlook from Dylan Setterfield, head of forecast strategy at Cap HPI.
He said the import tariffs imposed by President Trump and potential retaliatory measures from China could result in widespread recession and substantial disruption to industrial sectors.
Meanwhile, automotive supply chains could be further disrupted by global conflicts, with Setterfield pointing out that the vast majority of automotive semiconductors are produced by the Taiwan Semiconductor Manufacturing Company. He warned that strained relations between China and Taiwan could severely impact availability.
Setterfield said:
“The vast majority of automotive semiconductors are made by TSMC. If China were to invade, the impact on the industry could be significant.”
‘Strange’ policy response
Facing such uncertainty, the UK automotive sector needs support from government but Setterfield suggested Labour’s policy direction is having the opposite effect.
He said: “They’re still trying to find their feet with a stated growth agenda, but they’re taxing business and upsetting everyone with a series of quite strange decisions.”
Among these, he claimed, is the recent revision to the ZEV Mandate, which introduced greater flexibility to manufacturers around electric vehicle sales but failed to incentivise a stalling customer base.
He said:
“There were some significant changes, but they were mostly aimed at easing penalties, not driving transformation. We could have introduced real incentives to boost private retail demand – the list of missed opportunities is almost endless.”
More positively, he said that the used car market remains resilient to a challenging economic climate.
Setterfield concluded: “In a recession, people still buy cars – just smaller, older, higher-mileage ones. That filters through the entire value chain.”
