Calls for £130m fund as UK car parts suppliers face distress
Business Economic Syndicated News 
Britain risks losing automotive suppliers critical to vehicle manufacturing before they can compete for future work, the Society of Motor Manufacturers and Traders (SMMT) has warned, as it calls for a £130m national Automotive Productivity Accelerator to fund capital grants, tooling finance, skills and diversification.
The trade body’s report, From supply chain risk to industrial growth, identifies £6.4bn of spending by vehicle manufacturers on priority components by 2030 that could go to UK suppliers, including significant opportunities to replace imports, if competitive conditions are secured.
According to the SMMT, high costs, lower demand and programme uncertainty are weakening the businesses that underpin UK vehicle production. It said many suppliers are in a state of distress, at a time when manufacturers are deciding where to award their next major vehicle programmes.
The SMMT said the strain extends beyond the shift to electric vehicles to makers of parts used across all powertrains, including seats, cockpit modules, plastic trim, pressings and castings.
Many of these businesses supply on a just in time basis and in assembly-line order, which the trade body said makes them integral to UK production. Losing them, it said, would strip value from UK manufacturing and make future vehicle investment harder to secure.
The report found that unpredictable demand and high UK labour and energy costs are squeezing cash flow and investment in equipment, skills and productivity. Some suppliers told the SMMT they were operating at around half capacity in parts of their businesses, which the trade body said raises the cost of every component and weakens competitiveness.
Insolvencies among UK vehicle and component manufacturers rose by approximately 180 per cent between 2016 and 2025, according to the SMMT, against around 63 per cent across all UK businesses.
UK car output fell to its lowest level since 1952 in September 2025, after the cyber attack that halted Jaguar Land Rover’s factories.
The proposed accelerator would build on Supplier Readiness and Transformation pilots in the West Midlands and North East, funded through DRIVE35, the government’s £4bn capital and R&D programme for the automotive industry.
Under the SMMT’s plan, the accelerator would provide £100m in capital grants for productivity, automation, robotics, AI and digitalisation, and £25m for skills. A further £5m, match-funded, would go to an Auto to Aerospace and Defence Readiness Programme to support diversification, which the trade body said would help retain skills and sovereign industrial capability.
The SMMT also wants DRIVE35 extended to components used in all powertrains, such as plastic mouldings and steel pressings, and dedicated tooling finance to ease the upfront costs of new vehicle programmes.
Beyond direct funding, it called for action on energy, employment and business rates costs, and for suppliers to benefit from the new Supply Chain Centre and Industrial Strategy zone incentives.
On trade, the trade body said a workable ZEV Mandate, full UK participation in the EU’s “Made in Europe” industrial policy and changes to UK-EU rules of origin to protect tariff-free trade were essential if demand is to become more predictable, alongside improved access to other priority markets.
Mike Hawes, SMMT chief executive, said: “Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible. Once their skills, tooling and expertise are gone, investment becomes harder to win, and far harder to bring back.”
He added: “The opportunity to reshore component spending in Britain is real, but we cannot take it for granted. Industry must improve productivity and work to secure critical capability, matched by government action on energy costs, market access and targeted investment support. Backing suppliers is not just about protecting today’s jobs, it is about securing Britain’s place in the next generation of vehicle manufacturing.”
The SMMT said it would work with manufacturers and suppliers, the Advanced Propulsion Centre, the Automotive Council and specialist partners to support viable import-replacement opportunities.
The UK automotive industrial base includes more than 2,500 supply chain businesses and 188,000 jobs, according to the trade body.
