UK Trade & Investment Automotive Investment Organisation

The UK offers investors a great business case underpinned by growing global demand, a world leading research and development ecosystem and the most supportive business environment in Europe for automotive companies.

1

2

AIO and UKTI

• The AIO is a team based in UK Trade & Investment exclusively focused on supporting the UK’s automotive sector, both by supporting further investments, and also by helping companies to export. • The AIO takes strategic direction from the Automotive Council. This means it can: Help investors by making use of all the advantages of being embedded into a highly effective and functioning civil service framework Use UKTI’s international network to support companies overseas …while remaining led by the industry, for the industry.

The UKTI Global Footprint

UKTI:160 locations in some 100 markets (98% of world GDP) Investment capability in 72 Posts, with 240 employees,

3

Working with UK team to connect:

Clients

WHQs, UK branches, supply chains

With Government

UKTI, OGDs, partners universities, sector bodies, funding opportunities

4

AIO Objectives and Targets

• • • Leverage inward investment to deliver long-term and sustainable growth in the UK Automotive Sector.

By taking direction from the Automotive Council...

• Increasing the amount of inward investment into the automotive supply chain; • Building and strengthening the Government’s relationships with global headquarters of vehicle makers; • Increasing the amount of foreign investment in automotive sector R&D - particularly in strategic areas; • Assisting UK based automotive supply chain companies with their exports to the new markets Promoting the image of the UK automotive sector among key decision makers in overseas markets, and promote the investment and trade opportunity

Our key target is 15,000 jobs created or secured by Foreign Direct Investment in the automotive supply chain over the next three years (this is double the number created or secured between 2010 and 2013).

What the AIO Can Bring To Your Organisation

5 Point of contact in Government and facilitation of Government support Support with developing investment propositions for overseas HQ

Automotive Investment Organisation

Export assistance for all UK-based companies Specialist advice and connections for customers, partners and suppliers Highlight your successes and raise the profile of UK automotive 5

Over the past seven years the UK has emerged as one of the most globally attractive locations for Automotive investment. The foundations for this success have been based on these key areas:

• •

1 - Growing Supply Chain Opportunity

:

The UK is experiencing an unprecedented period of growth In production volumes driven by global demand for UK manufactured vehicles as well as a domestic market that is the fastest growing in Europe resulting in a unique supply-chain opportunity.

Increasingly UK-based OEMs are looking for supply chain proximity to reduce logistic costs, minimise risk and to cater for R&D cycles that are growing ever quicker.

•

2- Strong Domestic and Export Market:

UK vehicle production volumes reached 1.6m in 2013, overtaking France in passenger vehicle volumes, and the domestic market was the strongest in Western Europe with year on year growth of nearly 11%. Over 80% of UK built cars were exported with a value of almost £25bn.

•

3 - Transformational Research & Development :

The UK provides an ecosystem which brings together leading-edge firms, universities, motorsports and funded projects to develop, commercialise and deliver technological innovations in the Automotive sector.

4 - Supportive Business Environment

: The UK boasts one of the most progressive and flexible business environments

which has made us number one in Europe for foreign direct investment.

6 6

1. Growing Supply Chain Opportunity

Domestic Car Market

Percentage Growth in Car Sales 2009 - 2013 20 10 0 -10 -20 -30 -40 -50 13,5 UK -22,2 Germany -22,5 France Italy Spain -24,1 Sweden -39,6 -16,2 EU UK France Germany Spain Italy EU

7 Source: ACEA 2014 7

1. Growing Supply Chain Opportunity

Vehicle Plant Locations & Output 2013

Land Rover Halewood

Freelander 57,618 Evoque 127,302

Leyland Trucks Leyland

Leyland Trucks 15,400

Alexander Dennis Larbert

Trucks 1,980

General Motors Ellesmere Port

Astra 73,466

Nissan Sunderland

Leaf 8,424 Note 24,348 New Note 34,553 Juke 147,954 Qashqai 227,110 New Qashqai 9,367

Optare Sherburn

Buses 444

Bentley Crewe

Continental 9,408 Mulsanne 1,088

Lotus Hethel

1,369

Geely (LondonTaxi Co) Coventry SAIC MG Motors Birmingham Toyota Burnaston

Auris 142,751 Avensis 36,482

Jaguar Castle Bromwich

F Type 9,466 XJ 18,917 XF 47,341 XK 2,842

Land Rover Solihull

Defender 8,362 Discovery 42,907 Range Rover 104,120

Dennis Eagle Warwick

Trucks 1,024 8 Source: SMMT 2014

Aston Martin Gaydon

3,828

McLaren Woking

1,406

Others

Morgan –

542

Caterham –

374

Rolls Royce Goodwood

3,265

Honda Swindon

Jazz 25,000 Civic 41,840 CRV 71,972

General Motors Luton

Vivaro 43,183

BMW Mini Oxford

Mini – 174,997 8

Toyota Deeside

200,418

BMW Hams Hall

408,060

Ford Bridgend

741,073

9 Source: SMMT 2014

Honda Swindon

139,741

1. Growing Supply Chain Opportunity

Engine Production Volumes

Nissan Sunderland

266,130

Bentley Crewe

10,496

Ford Dagenham

787,398

Bentley W12 Jaguar Land Rover i54

9

1. Growing Supply Chain Opportunity

Projected Production Growth

2,50 2,00 1,50 1,00 0,50 0,00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

10 Source: SMMT 2014

2018 Projection 2.24m

Production Volume Projected Volume

10

1. Growing Supply Chain Opportunity

11

Component

Engine castings Steering systems Trim Harnesses Seating Tyres Alloy wheels Lighting Electronics (ECU, ESP, ABS, PDC) Engine forgings External plastics (bumpers, trim) Entertainment/Navigation Bearings Instrument clusters Glass Hinges Hot Stampings Welded assemblies

The £3bn Supply Chain Opportunity

Opportunity value (£m)

370 220 170 160 150 140 140 130 110 80 70 70 70 70 170 100 90 80

Component

12V lead/acid battery Cast aluminium sub-frames Brake callipers Drive shafts & CVJs Engine accessories (alternator, starter, aircon) Fuel tanks HVAC assembly Chassis Suspension Module Misc assemblies (pedals, mirrors, roof rails, grilles etc) Shock absorbers Heat shields Oil pans Small pressings Transmission components Large/medium pressings Steel wheels Carpets Suspension springs Switchgear 40 40 30 30 30 30 30 20 20 10 10

Opportunity value (£m)

50 50 50 40 60 60 50 50 11

12 Source: SMMT 2014

1. Growing Supply Chain Opportunity

Over £10bn invested since 2012

12

2 - Transformational Research & Development

Global Centre of R&D Capability & Motorsport: The UK is home to 4 of the global top 10 Universities, many of which working in collaboration with the Automotive sector to develop and deliver the technologies of the future. The UK is also home to 8 out of the 11 Formula 1 teams. Leading Automotive R&D Facilities: The UK is home to world class facilities and is the ideal location for automotive R&D supported by investment From OEMs, innovative suppliers and funded Government programmes.

13

World Leader in Low Carbon Technologies: With world leaders in engine technology including, Ford, Nissan and Jaguar Land Rover working in collaboration with suppliers and supported by large-scale Government funding, the UK has emerged as a leader in the development and commercialisation of low-carbon technologies.

13

14

2. Transformational Research & Development

UK Capabilities

Advanced Engine Technologies and Systems

The UK is home to leading global engine manufacturers using the country’s technical capabilities to design advanced engines across a diverse range of sectors and engine technologies.

Advanced Manufacturing

Transformational breakthroughs are being made across a number of manufacturing fields, underpinned by the UK’s dominance in areas such as composites, rapid production techniques and advanced joining.

Aerodynamics

Connect with the UK’s extensive aerodynamic expertise from its world-leading aerospace and motorsports industries to dramatically reduce fuel consumption in mass-market applications.

Design Creativity

A design-led automotive sector, serviced by globally renowned centres of excellence and the world’s leading car designers.

14

2. Transformational Research & Development

15

UK Capabilities (continued)

Electric Machines and Power Electronics

Global vehicle makers are developing exciting future electric-vehicle technologies in the UK, supported by expertise across automotive, rail and power-generation engineering.

Energy Recovery and Storage

Collaborate with the UK’s global pioneers in vehicle energy recovery.

Intelligent Mobility / Intelligent Transport systems

Companies are recognising that the UK’s strengths in communications, electronics, big data and test infrastructure to develop Intelligent Mobility solutions.

Lightweight Design, Materials and Components

The light-weighting expertise grounded in the world’s largest Formula 1 industry and second-largest aerospace sector is key to delivering the transformational weight reduction required for mass-market vehicles of the future.

Systems Integration and Homologation

The UK has world-class expertise and experience in the homologation of vehicles for European markets.

15

2. Transformational Research & Development

Motorsports

The UK is the global centre of the Formula 1 industry. The technological innovations found in Formula 1 underpin the nine areas of R&D capability identified as the major strengths of the United Kingdom

16 The UK is home to

eight

of the

11

Formula 1 teams.

Overall there are

4,500

firms in the UK motorsport sector.

Technological innovations generated though F1 have a trickle down effect into the wider automotive sectors as well as innovative applications in other sectors such as aerospace or pharmaceuticals 16

17 Source: MIA 2014

2. Transformational Research & Development

Motorsport Valley

17

18 Source: MIA 2014

2. Transformational Research & Development

Motorsport Suppliers

18

19

Examples of technology transfer from F1 to commercial road usage

20

2. Transformational Research & Development

R&D Ecosystem

The combination of UK expertise and its forward-thinking approach gives the country a unique strength in the development of key automotive technologies. The UK’s strong manufacturing and supply chain ecosystem consists of a broad range of innovators that covers the whole development life cycle from initial concept through to commercial launch.

20

21

2. Transformational Research & Development

World Class Facilities

21

2. Transformational Research & Development

Centres of Excellence – High Value Manufacturing Catapults

Advanced Forming Research Centre, Glasgow Centre for Process Innovation, Wilton Advanced Manufacturing Research Centre, Sheffield The Nuclear Advanced Manufacturing Research Centre, Sheffield The National Composite Centre, Bristol 22 The Warwick Manufacturing Group, Coventry The Manufacturing Technology Centre, Coventry 22

2. Transformational Research & Development

Low Carbon Technologies

23 Ambitious EU & UK emissions targets are increasing the demand for ultra low emission vehicles , including hybrids and electric vehicles Regulatory CO 2 targets are in place around the world, with the EU targeting a fleet average for new cars of 95g of CO

2

per kilometre by 2021.

The UK Government’s vision is that by 2050 almost every car and van in the UK will be an ultra low emission vehicle (ULEV), with the UK automotive industry at the forefront of their design, development, and adoption. • • • • The UK has a long-term, stable and comprehensive policy framework to support the transition to ULEVs, backed by significant funding commitment of £400m to 2015 and a further £500m from 2015-2020: Funding to stimulate demand for ultra low emission cars and vans Support for ultra low emission taxis and buses Support for the development of infrastructure Funding for research & development The UK Government and automotive industry are investing heavily to make the UK a world leader in research and development for electric and hybrid vehicles. They have committed £1bn to the new Advanced Propulsion Centre to support the development of next-generation propulsion technologies from research through to mass-manufacture. Similarly, The Proving Factory is helping companies in hybrid power to commercialise their technologies. 23

3 - Supportive Business Environment

Funding & Support at National Regional and Local level: With innovative programmes at national level including the Advanced Propulsion Centre and the Regional Growth Fund as well as local funding though Local Enterprise Partnerships, there is very strong public support for UK-development initiatives Strong Relationship Between Government And Industry : Through the SMMT, Automotive Council and the Automotive Investment Organisation, the government and industry are proactively working together to attract investment, boost trade and implement policies that support the continued growth of the UK Automotive sector.

Competitive incentives For businesses: The UK has one of the most competitive corporation tax rates in the EU, low labour costs, flexible legislation, a stable currency and developed infrastructure.

24 24

25 Source: KPMG 2014

3. Supportive Business Environment

A Great Place to do Business

Excellent labour and Industrial relations The most competitive tax regime

25

3. Supportive Business Environment

Competitive Incentives & Key Initiatives

Advanced Propulsion Centre (APC):

As part of the Automotive Strategy, Government and industry are jointly investing over £1bn over the next 10 years in the APC

Regional Growth Fund (RGF):

Over £230m has been allocated to Automotive companies to date.

Innovate UK:

A competitive fund supporting investments in technologically driven transport projects – Over £310m has been allocated to Automotive companies to date.

Advanced Manufacturing and Supply Chain Initiative (AMSCI):

Funding of £120m for R&D, skills training, and capital investment for supply chain companies.

Ultra Low Emission Vehicles (ULEV):

The Government has committed £500m to support the development and uptake of ULEVs all the way out to 2020.

Employer Ownership Funding:

Up to 50% contribution to training costs for transferrable skills up to a value of £2m.

R&D Tax credits:

R&D Tax Credits is a scheme allowing companies to reclaim a significant percentage of their development costs back in cash whether you are profitable or pre-revenue.

High Value Manufacturing Catapult (HVM):

A £200m scheme providing UK business with a gateway to access the best manufacturing talent and facilities in the country.

The Patent Box:

provides an effective corporation tax rate of 10% on profits from patents registered in the UK or European patent offices.

26 26