Overview of the Structure of the UK Automotive Industry Supply Chain
The automotive industry relies on a complex, tiered network of suppliers, represented schematically in the diagram below.
There are currently more than 40 companies that manufacture vehicles in the UK, ranging from global volume car makers, van, truck and bus builders to specialist niche players. The UK accounts for some 2.4% of worldwide vehicle output and 8.7% of European assembly, ranking it fourth in Europe and twelfth globally in terms of scale.
In contrast, the UK has in the region of 2,600 component manufacturers and suppliers, employing over 115,000 people, with particular expertise in power train design and production. Approximately 90% of automotive component suppliers are SMEs, employing less than 200 workers.
There is limited innovation in the UK amongst the key vehicle manufacturers and Tier 1 component suppliers, as many are foreign owned and have their R&D facilities outside of the UK (the major exceptions being Ford, Jaguar, Land Rover and Nissan). However there is significant development activity amongst the Tier 2 + SME suppliers.
Many SME innovators deviate from the industry tradition in which innovation emerges from large research labs at major companies. Some SMEs may come from outside the existing supply chain, and/or challenge the existing market structure. This change has occurred in part as a result of vehicle manufacturers passing on the onus of innovation to the supply chain.
The industry is supported by a strong platform of related capability and intellectual property (IP) within the UK science base with excellent potential for technology transfer and commercialization.
GM, Ford, Toyota etc.
- Make vehicle-level integration trade-offs
- Expertise in integration, retreating from component expertise.
Delphi, Visteon, Denso, Bosch etc.
- Integrate across component boundaries
- Rarely across vehicle systems.
- Large enterprises selling niche expertise e.g. Intel, Hella, Autoliv or
- SMEs in 'traditional manufacturing' sectors e.g. cast or pressed metal parts, plastic mouldings.