News review: What happened in 2019

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The last year has been an eventful one for car makers generally and, more specifically, the UK car industryCivic will be the last Honda to be built at the Swindon factoryThe car industry has always looked ahead, but it has never been more focused on the future than it is right now. It is a time of unprecedented change, with electrification, legislation, autonomy and other new technology set to profoundly affect the way cars are built, powered, driven and sold.

Those machines show the future is bright: the problem is that it’s not here yet. But the disruption being caused by all that change – and several other factors – is and was reflected in the turbulent state of the car industry in 2019.

Here are the big issues that dominated the motor industry this year.

Uncertainty hits car sales

Analysts expect more than three million fewer new cars will be sold globally this year than in 2018. In the UK, year-on-year sales were down 2.7% at the end of November. There are multiple reasons for the decline, with the economic slowdown and consumer uncertainty playing key roles, exacerbated in the UK by the ongoing drama over Brexit.

The continued decline of diesel, accelerated by the increasing prospect of anti-diesel legislation, was also a major reason for the fall. Sales of diesels fell more than 22% year on year in the UK – hitting firms with a heavy reliance on those engines, such as Jaguar Land Rover (JLR).

Another key concern was the continued struggle of China: sales in the world’s biggest car market were down more than 12% year on year, not helped by trade tensions between China and the US.

The impact of tougher WLTP emissions tests introduced in late 2018 carried into this year and several firms had to temporarily pull certain cars from sale due to backlogs in getting cars certified under the new system.

The bigger challenge the industry had to face up to this year was preparing for the introduction of the EU’s 95g/km CO2 fleet emissions target in 2020. Those targets will be impossible to hit using purely combustion-engined cars and, with sales of fully electric vehicles yet to pick up, that led to a huge push of hybrid cars.

There will be massive fines for missing those targets, so expect disruption in the availability of certain models as firms take action to adjust the average CO2 emissions of their fleet during 2020.

The challenge of electrification

That turmoil comes as firms are having to invest heavily – we’re talking billions of pounds here – in future technology. Electrification is coming: legislators and an increasingly environmentally conscious public demand it.

Car firms are having to develop electrified powertrains and overhaul their production facilities – and, in some cases, substantially reorganise their entire business operations. They also need to invest in autonomous, digital and connected technology.

That investment is needed today, but the pay-off won’t be immediate: EVs accounted for less than 2% of new car sales in the UK in 2019. That figure will rise sharply in years to come as an increasing number of EV models are launched – although it’s clear that the public still needs some convincing to make the leap.

There’s also the question of where those cars will be charged, with the growth of fast-charging networks not reflecting the pace of EV development – and manufacturers, governments and charging firms debating who should be responsible for funding the expansion that’s required.

The huge investment needed in future technology led to another big trend of the year: partnerships. Companies can’t fund all that development by themselves and are increasingly sharing the cost.

Toyota has secured a string of deals with other Japanese firms, including Mazda, Suzuki and Subaru, to team up on EV development. Ford has agreed deals with rival Volkswagen and start-up Rivian to build future EVs on those firms’ platforms. JLR and BMW are co-operating on electric motor development. Even BMW and Mercedes-Benz, long-time head-to-head rivals, are working together on autonomous technology.

The quest for economies of scale also drove a push for numerous firms to investigate combining forces in formal mergers. The PSA Group reportedly looked at buying JLR; and Groupe Renault and Fiat Chrysler Automobiles (FCA) held merger talks. Neither came to fruition but did point to the biggest story of the year: the agreement of FCA and PSA to merge. The deal, still awaiting final approval, will create the world’s fourth-largest car firm.

Manufacturing in the UK

It was a tough year for car manufacturers in the UK. Falling sales led to falling production, while firms were also forced to invest time and money on Brexit contingency measures for several scheduled (and delayed) dates for the UK’s exit from the EU. The lack of an agreement between the UK and EU meant firms spent much of the year not knowing how cross-border trade would work.

That uncertainty came on top of already tough conditions. Honda announced it would shut its Swindon factory, with Ford closing its Bridgend engine plant. Nissan shifted plans to build the next-gen X-Trail away from its Sunderland site and the long-term future of Vauxhall’s Ellesmere Port plant remains uncertain, particularly in the wake of the PSA-FCA merger.

Those various struggles are all for numerous different reasons, but all combined to make it a tough year.

The outsiders: the new firms trying to disrupt the industry

Thanks to ever controversial boss Elon Musk, Tesla is rarely far from the headlines – and it again attracted plenty of attention in 2019.

Questions over Tesla’s financing, stock value and long-term future remain, but the firm had a good 2019: Model 3 sales were strong and the first examples reached the UK and mainland Europe; it unveiled the Model Y SUV and Cybertruck; and it started work on a pivotal Shanghai factory.