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Aston Martin's struggles are symbolic of a foundering UK car industry. Who will survive?

aston martin vantage
The latest Vantage flies the flag until the eagerly awaited DBX, Aston Martin's first SUV and a crucial launch for the company

Reports that Aston Martin has slipped deeper into the red are further evidence, if any were needed, of the "existential crisis" facing the UK's entire automotive industry; of falling demand (particularly in China), emissions compliance and the rapid decline of diesel, doubts over tariffs and production delays caused by Brexit and the challenges of a headlong rush into all-electric cars.  

Until recently, the broader picture was that these challenges facing the entire industry were being felt most keenly by the volume manufacturers, rather than the UK's successful luxury car-makers.

Profitability is crucial in the volume sector – meaning Vauxhall, Honda, Nissan, Toyota and Mini, as well as Jaguar Land Rover, which despite its premium-badged products is the largest car producer in the UK makes all its models except one here. Any increase in tariffs or delays to the "just-in-time" production used in all car factories can cause backlogs and dent precious profitability. 

But it's more than simply delays. If inward-bound parts and sub-assemblies are subject to tariffs, and there are also taxes on completed cars for export, it isn't hard to imagine why any CEO worth his salt would at least consider moving production to within the EU.

Despite its travails, the future looks bright for Aston Martin in terms of product. The DBX, its first SUV, can't come soon enough however. And perhaps the company is rueing being late to the party: premium rivals such as Bentley, Maserati, Lamborghini, even Rolls-Royce, have had an SUV on their books for years. Only Ferrari lags behind the wholesale introduction of SUVs, yet it will soon release details of its own take on the genre.

Aston Martin's CEO Andy Palmer shows off the production DBX at the Geneva motor show

There are also several cost implications. Although it has an agreement with Mercedes-Benz for engines and electronic architecture, Aston Martin is still a small company and to a large extent has been punching above its weight - and market reputation.

Greater than this is the company's over-valuation at £5 billion when it was floated on the London Stock Exchange in October 2018. 

Its involvement in Formula One motor racing with Red Bull has to be questioned. The deal is undoubtedly great for raising the company's profile in a high-tech arena, but it is arguably less effective - and probably way more expensive - than continued involvement with the James Bond franchise. 

Much comment has been directed at Aston Martin in comparison to its performance relative to Rolls-Royce and Bentley. By any measure both have enjoyed spectacular success in these challenging times, particularly BMW-owned Rolls, although VW-owned Bentley has been purring along nicely and even posted an 8% increase in its largely hand-built production.

Max Verstappen of Aston Martin Red Bull Racing celebrates after winning the German Grand Prix on Sunday. Is F1 a drain on Aston's resources? Credit: RONALD WITTEK/EPA-EFE/REX

Aston Martin, Rolls-Royce and Bentley notwithstanding, the scale of the crisis facing UK manufacturers is this:

According to data from the Society of Motor Manufacturers and Traders (SMMT), Jaguar Land Rover was the UK's largest producer of cars in 2018, its 449,304 total accounting for 30 per cent of the UK's overall output. Yet it announced in January this year that there would be a 4,500 reduction of jobs in the UK by 2021 - it currently employs about 19,000.

Then Nissan, which made 442,254 cars at its plant near Sunderland (29% of the UK total) and employs 7,000, said that it had decided to no longer produce the next X-Trail SUV there and instead build it in Japan. With Infiniti-badged models made at the same factory selling poorly, the writing could be on the wall for that production line, leaving just the long-in-the-tooth Juke and the Leaf battery-electric car.

Mini, owned by BMW and employing 7,000, is the UK's third largest producer, making 234,183 cars in 2018 (15%). As long ago as September 2018 it said that a month-long closure at the factory at Cowley on the outskirts of Oxford had been brought forward to this April, initially to reduce any "possible short-term parts-supply disruption" after the proposed Brexit date of March 29.

Honda's announcement to close it Swindon factory, which was responsible for 11% of UK car production in 2018, was blamed on the challenges affecting the whole industry   Credit: The Asahi Shimbun/Getty Images

Honda dominated the news in February. The 160,676 Civics it made at Swindon in 2018 account for 11% of UK production, but the factory will be permanently closed in 2021 and 4,000 employees in the UK will be affected.

Toyota has been less vociferous than many about the perils of Brexit, but it has said that it had considered possible temporary closure of its factory at Burnaston in Derbyshire in the event of a no-deal outcome. It employs 3,000 UK workers and its 2018 output of 129,070 cars was 8% of the UK total.   

Then this week Carlos Tavares, chief executive of French car-maker PSA Group, said that he would consider relocating production of the Astra hatchback from Ellesmere Port to within the EU if Brexit renders the UK site unprofitable.

Who is left? Lotus and McLaren. That's it. Although the latter's Woking-built supercars are still in demand, Norfolk-based Lotus is best described as a perennial struggler.

Soichiro Honda: was he right all along about the decline and consolidation of the global car industry?

We wish all of the above well in the most difficult of times, although even Aston Martin's most famous consumer James Bond might be struggling to win this particular battle.

Soichiro Honda, founder of the eponymous internal combustion engine giant, famously suggested that in the future there would be no more than a dozen car companies in the world – and Morgan.

Was Mr Honda way more prescient than we thought at the time?

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