An Overview of the Car Industry in the UK

The car industry is among the most sensitive and cyclical industries in world. What that means is that their performance is wedded, for better or worse, to the performance of the national economy. So, when times are bad, car sales decline, and when times are good, car sales increase. It is a fairly simple and logical assumption to make. After all, when the economy takes a downturn, people don't buy new cars. They have much more pressing concerns, like feeding their children.

And although cars do provide an important function (transportation), they are still generally considered luxury items, since there are many other ways to get from point A to point B. That is why the car industry is typically a leading economic indicator, which means that it is the first to suffer when the economy goes in the toilet.

That is exactly what happened to the car industry in the UK when the global economy went into recession in 2007 and consumers tightened their purse strings and saved their money instead of spending it on luxury goods. Of course, this wasn't an isolated incident. The car industry in the United States was hit even harder and revered names like Chrysler and General Motors had to ask for aid from their government.

Still, the companies that we mentioned do have one thing going for them, they produce demotic, affordable automobiles. By comparison, many of the UK's top automakers are clearly in the Luxury car category. UK brands like Bentley, Rolls Royce and Jaguar do not produce conveyances that anyone would ever mistake for economical.

As you might expect, any time an industry that accounts for 11 per cent of the total value of U.K. Exports falters, that puts the nation in serious financial jeopardy. How much have they fallen? According to recent reports, the car industry in the UK declined by more than twenty per cent in 2009.