The Society of Motor Manufacturers and Traders or SMMT in UK is participating at the Auto Expo for the eighth time. With a range of players from the UK automotive industry ranging from DPF cleaner, gear design and development, quality spare parts and electric drive solutions, their 81 square metre Stall No 94 in Hall No 4 stands testimony to the thumping vote of approval in terms of potential Indo-UK trade opportunities.
Mike Hawes, SMMT’s Chief Executive tells Autocar Professional’s Sumana Sarkar that automotive trade between India and UK is worth around 270 million pounds sterling (Rs 2,490 crore) and he foresees growing potential for bi-lateral trade flourishing between the two countries. At present though, the Coronavirus outbreak and its domino effect are the biggest point of concern for the automotive industry.
What is your overall impression of Auto Expo Components 2020 in New Delhi, given the prolonged slowdown?
There’s an extremely positive sentiment at the Auto Expo. No doubt, it has been a difficult year for the automotive industry globally but the fact that people are here at such large numbers is a representation of their vote of confidence. Manufacturers have come in good numbers despite any pressure to attend and that is fantastic.
What is the overall theme of the UK companies participating at Auto Expo Components 2020?
The UK Pavilion has a range of companies exhibiting, demonstrating the diversity of the UK automotive industry from technology to supply chain and to aftermarket sections. Obviously, the focus area for UK companies is to provide innovation and promote engineering excellence. They see India as a great market and I see opportunity for serious business deals. We did not have to struggle to bring companies to the trade fair and that is a big positive.
What is the current value of business between Indian and UK component makers and growth opportunities going forward?
The collective automotive trade between India and UK is worth around 270 million pounds (Rs 2,490 crore). Over the past decade, the total number of UK-built cars exported to India has increased almost 12-fold.
Tata Motors’ investment in Jaguar Land Rover and Tata Motors’ research centre in the UK, and Indian automotive heavyweights Mahindra & Mahindra’s and Optare’s presence in the UK highlights the importance of UK-India trade. UK manufacturers such as GKN Automotive have facilities in India. India is a growing market and the relationship between UK and Indian companies is growing as well. We see growing potential for bi-lateral trade flourishing between the two countries.
Can you elaborate on how important the automotive sector is to the UK economy and the post-Brexit scenario for the sector?
Britain is still in a transition phase. Good trading agreement with European nations, (especially in terms of tariffs) and other countries globally is the need of the hour. It is crucial to ensure that the trading terms are lucrative right from the negotiation stage. I am confident that this will come through and British companies will be able to take advantage of the best possible opportunities.
In one of your 2019 reports, you mentioned that tariffs on parts and components in developing economies including India are high, often ranging between 10% and 30%. How do you asses the current situation the extent to which you think this factor impacts business?
Tariff needs to be avoided at all cost. It undermines competitiveness. We are an advocate of free trade. Mutual benefit needs to be underlying thought behind any trade negotiation.
UK car exports to China peaked in 2014, at more than 135,000 vehicles. A general slowdown in the market, turbulences in the Chinese stock exchange and political measures also contributed to lower export volumes in 2015-2018. What is the outlook going forward?
Indeed trade with China became muted after growing for a few years. Right now the Coronavirus is the big concern for companies around the world. Of course, the first priority is the health of the workers. But it goes without saying that this will have a potential knock-down impact on the entire supply chain. Companies will no doubt try to offset the impact to some extent but it will no doubt see its ripple effect across the automotive industry.
India is in the UK’s top 10 Asian export markets. How do you see it panning out, going forward, and the role of component makers? How do you see governments and industry across these countries exploring?
I see tremendous opportunities between the two countries. Innovation is the real driver here. It can come from both UK and Indian companies but side by side there is also the need to translate this innovation into good quality and cost-effective products. Not just the Indian markets but the automotive market globally is extremely cost conscious and companies will have to adapt technology accordingly.
How do you view the emergence of EVs and the impact on the IC engine parts industry?
The motor industry is undergoing a revolution and the UK stands ready to play a vital role, and to reap the rewards of the opportunities that future transport will bring. To meet our potential, we need the right support and investment to position the UK as a hub for the research and development of EVs and to boost sales of these low-emission vehicles.
You will be seeing a gradual transition from the IC to the EVs. IC engines have been here for a long time and are not going out in a hurry, and the same is true for the supporting component makers. But at the same time, you must remember that if companies plan to be relevant going forward, they will have to invest in EV technology for the longer term.
How does participation at such industry events help prospects for UK component manufacturers in general and SMMT in particular?
We get a first-hand opportunity to understand the market and the industry, get to know contacts and find out what opportunities there are for British companies. It is a platform to promote the UK automotive sector to the Indian market, find partners, buyers and distributors.