2:47 pm, August 20, 2020
SMMT chief executive Mike Hawes believes more car manufacturers are going to be forced to forge partnerships if the industry is to avoid more shocking departures like Mitsubishi.
Speaking to Car Dealer Live, Hawes said the rising costs in R&D will see more manufacturers collaborate.
And as the European market becomes increasingly competitive for car manufacturers there will be added pressures on global car manufacturers to assess whether they can continue to support the market.
Mitsubishi has said it will no longer develop new models for Europe – effectively sounding the death knell for the brand in the UK.
Its dealers and importer, the Colt Car Company, were equally shocked when the news was announced at the end of last month.
Asked if Hawes thought other manufacturers may follow the same path, he said he hoped that wouldn’t be the case.
He added: ‘It was really disappointing to see Mitsubishi’s announcement.
‘In Europe, it’s an incredibly competitive market. The regulatory framework is getting ever tougher.
‘Your readers will know just how slim margins are. On the manufacturing side, producing a vehicle that meets all of these and rightly so, but profitably, it is about volume.’
Hawes suggested it would be easier for car manufacturers if there were global standards so the cars it developed were relevant to all markets, however he admitted local market ‘politics’ often intervenes.
He added: ‘So you have to make sure you can fulfil the obligation to each market and that you’ve taken products to market that you can make money on – because if you can’t make money, you can’t develop.
‘The R&D costs are growing exponentially. Remember the automotive industry spends more on average on R&D than any other sector, any other segment.’
He said he thinks that the collaboration and alliances we have seen develop among car manufacturers in the last 10 years will continue.
And added that he is excited to see the new challenger brands enter the European market.
Hawes said: ‘The interesting thing is whether there will be new entrants into the European market.
‘In particular Chinese manufacturers. Will they come into the UK market?
‘They’re already in some European markets and that’s going to bring more choice to the consumer, but I still think that the major brands, given their market position, and their brand strength, their R&D commitments, are going to be the ones who drive these transitions.’
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