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Everything to Know About the Automotive Industry in the U.K.

min read
Everything to Know About the Automotive Industry in the U.K.

Despite its physical size — roughly equivalent to the U.S. state of Oregon — the United Kingdom is very much a car culture. It’s estimated that there are 40.5 million vehicles on U.K. roads. Not bad for a population of just over 67 million. About two-thirds of U.K. residents own cars, and eight in 10 cars manufactured in the U.K. are shipped abroad to 130 countries. 

In this blog post, we will tell you everything you need to know about the automotive industry in the United Kingdom. That includes the latest industry and digital marketing trends and technologies that are propelling the automotive sector forward. We’ll lead off with a look at how the automotive industry in the U.K. has changed over the past 125-plus years.

Evolution of the Automotive Industry in the U.K.

The automotive industry in the U.K. was born in 1897, around the same time as its U.S. counterpart. That’s the year when the first Daimler rolled off the car manufacturer’s factory floor in Coventry, in the U.K.’s Midlands. Daimler is viewed as the first U.K. car manufacturer, and the company provided cars to the British monarchy until it lost its royal warrant to Rolls-Royce in the 1950s. (Today, you are more likely to see members of the royal family in assorted Range Rovers, Aston Martins, or Jaguars.)

The 1970s marked the downturn of the automotive industry in the U.K. In the 1950s, the United Kingdom was the second biggest car market in the world (after the U.S., which today ranks second). But over the last 70 years, the U.K. has been surpassed by Mexico, Germany, India, Japan, and China. The latter country is today’s largest car market.

Still, the U.K. remains on the leading edge of innovation in the automotive sector, due in part to recent changes in British government policy related to the environment. In September 2023, the government of Prime Minister Rishi Sunak laid out aggressive plans to reach zero emissions by cars and vans sold in the U.K. The plan calls for 80% of cars and 70% of vans sold in the country to be zero-emission by 2030 — and 100% by 2035. While the 2035 end date puts the U.K. very much in line with the goals of other major nations, the pace of the proposed conversion is the most optimistic.   

Current Landscape and Top U.K. Automotive Companies

Car manufacturing in the U.K. continues to be a significant part of the economy, but few of the manufacturers are British. Jaguar/Land Rover is owned by Tata, an Indian manufacturer. Bentley is owned by Volkswagen, and Rolls-Royce by BMW. Both owners are German. A Chinese investor now owns the manufacturer of London’s famed “black cabs.” Even the iconic Mini Cooper, which features Union Jack flag motifs on its wing mirrors, is owned by a German company.

There’s also a disconnect between the government’s zero-emission targets and underlying consumer trends. Notably, sales of battery-electric vehicles declined by 17% in October 2023. The U.K. government and various municipalities are trying to bolster the zero-emission policy by installing Low-Emission and Ultra Low-Emission Zones (ULEZ) in the nation’s capital and other cities.

ULEZ in London operates 364 days a year. (Yes, drivers get a gift on Christmas Day!) On any other day, drivers entering the ULEZ in a vehicle that doesn’t meet ULEZ standards must pay the equivalent of a $15 fine. (Do the math: Over a year, that’s a $5,500 premium for the privilege of driving to work, shopping, and taking the kids to school.)

So, it remains to be seen if the U.K.’s emphasis on zero emissions will achieve its goals within such an aggressive timeline. What’s clear is that the path is set. Meanwhile, the most popular U.K. cars continue to be traditional or hybrid models of the Ford Puma, Nissan Qashqai, Vauxhall Corsa, Kia Sportage, and Hyundai Tucson. The all-electric Tesla Model Y was the sixth best-selling car in 2023.

Growth and Innovations in the U.K. Automotive Sector

Despite challenges, the U.K. automotive sector continues to see the potential for future growth, not least from technological advances in cars (such as lane assist and self-driving functions) as well as the push for zero-emission vehicles.  

U.K. Automotive Industry Growth Trends

Despite falling down the global rankings, U.K. automotive growth trends are likely to remain positive in the future. The push for zero-emission vehicles may result in a surge in demand for electric vehicles closer to the deadlines set by the government in 2030 and 2035, or if the government introduces new incentives to buyers. 

Estimates suggest the U.K. market may see a growth rate of 6% between now and 2028. While some of this growth will be fueled by EV purchases, Britons continue to warm to sport utility vehicles (SUVs), which represent the largest segment of the consumer market. 

Innovations Shaping the Future

The U.K. has moved slower than other countries to embrace game-changing innovations such as full self-driving technologies, also known as Connected and Automated Mobility (CAM) vehicles.

However, there is legislation in the U.K. parliament to create a legal framework for CAM vehicles, which have faced criticism in some quarters as safety hazards. If passed, the legislation means cars with self-driving features may hit the roads as early as 2026. (Interestingly, the legislation plans to make manufacturers, not owners, liable for crashes caused by self-driving vehicles. We’ll see if that provision stays in the package.)

As already discussed, electric vehicle technology is moving forward at a more rapid pace due to an aggressive government timeline. What may hold back this innovation is consumer sentiment. First, EVs are relatively high-priced compared with non-EVs, and many of the best financial incentives to purchase an EV have lapsed, except for company cars and fleets. An additional hurdle is the lack of EV-charging infrastructure in the U.K., though the industry is seeking to move this forward. 

Economic Impact and Contribution

The automotive sector is a vital part of the U.K. economy and represents about 2% of overall U.K. gross domestic product (GDP). To put that in perspective, the much larger U.S. automotive market contributes about 3% to GDP.

Contribution to the U.K. Economy

Auto manufacturing alone contributes more than $85 billion a year in revenue to the economy, and then there are car sales, both new and used, and car repair. Used car sales alone are projected to reach $226 billion by 2027.

The automotive sector’s real impact though, is in trade. New car exports account for 10% of all U.K. trade, generating almost $100 billion in trade annually

Supply Chain and Manufacturing

According to the Society of Motor Manufacturers and Traders (SMMT), the U.K. car industry’s main trade association, there are more than 25 major companies manufacturing cars in the U.K. And there are many more specialty car manufacturers to boot. These companies employ more than 182,000 people, and there are another 780,000 employed in the broader automotive industry.

U.K. car manufacturers build 70 models of cars and trucks, as well as engines. In 2022, 775,014 cars, 101,600 commercial vehicles, and 1.5 million vehicle engines were manufactured in the U.K. The automotive industry in the country also supports more than 2,500 companies manufacturing and distributing parts for motor vehicles. 

3 Challenges and Opportunities

Despite its role in the overall economy, the automotive industry in the U.K. faces challenges, and opportunities, just like any other major industry. Top among them are the following:

1. Addressing Environmental Concerns

Environmental concerns loom over the automotive industry in the United Kingdom. The U.K. government’s policy on zero emissions, while laudable, may be unrealistic. There’s a mismatch between aspiration, infrastructure support, and consumer sentiment. Nevertheless, it’s estimated that there are almost 1 million electric cars on U.K. roads and 570,000 plug-in hybrids, or 4% of the total number of cars in operation

Car manufacturers are also facing pressure to make the manufacturing process more sustainable and less damaging to the environment. There is a struggle to reduce volatile organic compound (VOC) emissions and water use, but CO2 emissions are down. More renewable energy is being used in car production, as well. According to SMMT, the amount of waste caused by car production and headed to landfills is down 98% since 1999, and the industry has a net-zero goal for landfill waste.  

2. Opportunities for Innovation and Expansion

According to SMMT, there are 22 research facilities in the United Kingdom dedicated to automotive innovation today. They include:

  • Research and development facilities funded by major car manufacturers
  • Educational research centers
  • “Think tanks” such as Cardiff University’s Centre for Automotive Research

There are also public-private partnership ventures such as the Advanced Propulsion Centre in Coventry, which is researching and developing low carbon powertrains for future car manufacturing.  

3. Brexit and the Impact on the Automotive Industry

Brexit has had an impact on almost every sector of the United Kingdom’s economy, and the automotive industry in the U.K. has not been immune. However, there is disagreement between the government and the automotive industry over Brexit’s overall impact. 

That said, many neutral observers and all U.K. automotive companies agree that there has been a noticeable impact on the supply chain. Import tariffs also could be a problem. More than half the cars manufactured in the U.K. for export head to European Union members.  

Marketing Trends in the U.K. Automotive Industry

Some of the most exciting developments in the automotive industry in the U.K. are taking place in the sphere of marketing. Some of the automotive marketing trends making the biggest splash in the country are outlined below. 

Digital Marketing Strategies

U.K. automotive companies have fueled explosive growth in digital marketing strategies over the last few years. The money that car companies and dealerships are spending on digital display ads alone grew by 71% between 2020 and 2021

In some respects, the automotive industry in the U.K. is just following a broader trend toward digital. Dealerships and manufacturers, like other businesses, are finding that buyers are increasingly doing their research online, tracking reviews, and comparing prices before picking up the phone and checking on inventory. The challenge, of course, is navigating consumer movement from online (digital) to offline (phone call or dealership visit) to optimize automotive digital marketing campaigns. 

This is where technology is allowing automotive industry marketing professionals and those in other businesses to catch up. Conversation intelligence solutions, like Invoca, track and analyze 100% of phone conversations. This allows marketers to understand which digital marketing efforts are driving high-value phone leads and invest their budgets accordingly.

AI tools like Invoca also allow automotive marketers to collect first-party data from phone conversations at scale. They can use these insights to implement highly targeted digital marketing campaigns that align with the consumers’ needs and interests. 

Personalization and Customer Engagement

As part of an overall digital marketing strategy, U.K. automotive companies are also using data to assist in ad and marketing personalization and customer engagement. Many customers today crave personalization, especially car buyers. They want a no-hassle, specialized customer experience. And research shows that 54% of car buyers are willing to overlook the price tag to purchase a car from a dealership if they receive an exceptional experience and after-sales service.

Here again, advancements in AI are helping marketers. Invoca’s conversation intelligence platform uses AI to route calls to the right sales agent based on the digital journey a consumer takes. This tool gives sales agents the ability to know who is calling as well as why they are calling. That allows them to personalize the conversation to fit the customer’s needs and expectations.

Marketers can also use insights provided by Invoca to retarget callers with relevant offers that might bring them closer to a conversion. Retargeting strategies are critical to the success of digital marketing programs.

For example, Invoca’s conversation intelligence allows marketers to understand why a potential buyer called so they can retarget ads to hit the caller’s sweet spot. Doing so can entice callers who didn’t make a purchase (because maybe they were waiting for an upcoming sales event), or who needed more detailed information before they could commit.

Customer Experience Trends in the U.K. Automotive Sector

Closely aligned with digital marketing strategy is the automotive customer experience. Car buyers know they are making a big investment when purchasing a vehicle and, rightly so, desire top-notch customer support and a pleasant customer experience as part of the overall package.

Enhanced Customer Service and Support

Consequently, U.K. automotive companies are constantly pursuing customer service innovations and new strategies to improve the overall customer experience. Exceptional customer service is the best salesperson a car company can employ. Customers who take a pleasant journey toward buying a car will very likely take it again with the same dealership in the future.

That’s why car dealerships’ sales agents must be properly trained and informed when they interact with prospective buyers. Quality assurance (QA) scores matter, and you can easily automate QA using technology like Invoca. Invoca’s automated QA quickly and accurately scores every call with customers, so sales managers don’t have to. AI and machine learning ensure that your sales agents are hitting the right talking points and providing a seamless experience to the prospective buyer.

Embracing Technological Advancements

In fact, AI is helping to deliver seamless and innovative customer experiences throughout the automotive industry in the U.K. and elsewhere. AI’s ability to collect, review, and sort large amounts of data and scale processes means automotive marketing teams have a reliable technology for smoothing the customer journey and delivering an exceptional customer experience. 

AI can even tell you when your team has missed calls. In addition, having an AI-powered solution like Invoca in place can reduce missed calls driven by your campaigns. That helps you to save your marketing budget and boost your conversion rates. 

Invoca and the Future of the Automotive Industry in the U.K.

Invoca is helping to shape the future of how the automotive industry in the U.K. approaches customer service by providing marketers and businesses with tools to:

  • Improve marketing attribution
  • Enhance customer experiences through personalization
  • Capture new data at scale for market research and competitive intelligence

If you are a marketer active in the automotive industry in the U.K. and want to learn more about how Invoca’s conversation intelligence can help you elevate your marketing approach and drive better results, reach out to us today to set up a customized demo.

Additional Reading

Want to learn more about how Invoca can help you supercharge your automotive marketing strategy? Check out these resources:

Want to see Invoca in action? Request your personalized demo today.

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Webinar: Going beyond lead generation
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