The United Kingdom is a remarkable nation, when considering how small it is relative to its economic importance. This collection of islands has a land area of some 243,610km2, making it the 80th largest nation in the world. Yet it has the seventh largest economy by GDP. 

Much of this can be attributed to Britain’s mineral wealth, which enabled it to become the world’s first industrialised nation. This was originally based on the country’s large coal and iron ore deposits, supplemented by the large offshore oil and gas reserves discovered in the 20th century.

This formed the perfect backdrop for a flourishing motor industry. The car may not have been invented there, but a lengthy background of steam engineering and engineering innovation, fuelled by the available coal and iron, ensured that its potential was quickly recognised and the opportunities seized. Vehicle manufacturing was thriving in the opening years of the 20th century, the first manufacturers having established themselves in the 1890s.

Today, many of the names from that pioneering era survive – Rolls Royce, Rover, Vauxhall, with those that were established later – Aston Martin, Bentley, Jaguar, Lagonda, Land Rover, Lotus, MG, Mini and Morgan, although most are no longer in British hands. These have all been built into formidable brands, even though some reputations have not always lived up to the image. 

There are some 17 motor manufacturing plants in the UK, a number comparable with Italy. BMW (Mini), Honda, Nissan and Toyota all have car-manufacturing plants in the UK. 

Ford and General Motors produce vans in the UK, although Ford has just announced that its Southampton assembly plant will close when production of the current generation Ford Transit ends in 2013. Ford had planned to build chassis cab variants of the new Transit model at the plant, but all production will now be transferred to Turkey. 

General Motors builds the Opel/Vauxhall Vivaro panel van in a joint venture with Renault Nissan and the plant also builds the Renault Trafic and Nissan Primastar van. The last vestiges of the once great Leyland Trucks manufacturing empire remain, with a manufacturing plant producing DAF LF, CF and XF models. The company is now owned by PACCAR of the US, which owns Kenworth and Peterbilt Trucks, as well as DAF in Europe.

Honda car production is centred on the company’s plant at Swindon some 120km west of London. Jazz, Civic and CR-V models are produced here, along with petrol and diesel engines. Nissan produces the Juke, Qashqai and Leaf at Sunderland, while 

Toyota builds the Auris and Avensis at its Burnaston plant near Derby. GM builds the Opel/Vauxhall Astra at its Ellesmere Port plant besides the van production in Luton. As well as vehicle assembly, engine production, design, research and development are all well represented in the UK, while the UK has considerable expertise in motorsport and there is a well-established component sector.

Currently, the manufacturing sector is enjoying rising output, a contrast with the experience in some other European markets. According to data from the UK Society of Motor Manufacturers and Traders (SMMT), for the year to the end of October, vehicle production had risen 8.4% compared with the same period in 2011 to 1,314,518. At 1,220,304, car production had risen 9.7% for the same period, while commercial vehicle production was down 6.1% to 94,214, although the monthly trend was more encouraging, with production up 5.0% to 11,899. 2012 engine production was down slightly, by 0.2% to 2,121,314, with October again showing a slight rise, of 1.2% compared with October 2011 to 239,011.

The majority of this output was exported, with 82.4% of car production, 57.9% of 

commercial vehicle production and 62.5% of engine production destined for other markets.

The healthy trend in production is also reflected in vehicle registrations. For the same January to October period, SMMT data shows car registrations rose 5.0% to 1,771,861, with October registrations up 12.1% in 2012 compared with 2011 to 151,252. That is a significant figure, because the UK changes vehicle licence plates twice a year in March and September with the new plates showing the latest date mark. This tends to lead to a fall-off in demand for vehicles in the preceding months (February and August), a sharp rise in the plate change month and again, reduced demand in the following month (April and October). For registrations to remain healthy in October suggests that there may be renewed confidence in the UK economy although the indications of a sustained recovery are not necessarily present. Data from the European Automotive Manufacturers Association (ACEA) shows that the UK has been the only major European market to post growth during 2012.

SMMT data also records fleet registrations in the UK and for the same January to October period, fleet accounted for 49.7% of car registrations (881,182) with business 

registrations accounting for a further 4.4% (77,540), meaning fleet and business combined sales accounted for over 50% of car registrations. Fleet registrations have shown only modest growth for 2012, up 0.4%, while business registrations are down 11.1% compared with 2011, and private registrations were up 12.4% to 813,139.

Such is 2012 market growth that the SMMT has revised its full year 2012 forecast upwards to 2.013 million units compared with 1.94 million in 2011. This is the second forecast revision during the year. Originally the forecast was for 1.92 million units, which was raised to 1.97 million in July. The forecast for 2013 shows a slight increase to 2.015 million units.

The split between vehicles powered by diesel, petrol and alternative fuels tends to reflect the strength of the fleet sector. Diesel models accounted for 50.6% of 2012 registrations, petrol 48.1% and alternative fuels 1.4%. Alternative fuel vehicles posted the largest percentage rise, with registrations up 13.1% to 24,266.

Commercial vehicle registrations have not been so buoyant as the car sector this year, reflecting the financial constraints that many businesses are still experiencing. SMMT figures show that total CV registrations were down 3.9% compared with 2011 for the 

January to October period to 243,099. Trucks have had a good year, with registrations up 13% to 38,238, while light CV registrations, below 3,500kg gross vehicle weight (GVW) have fallen by 6.5% during the period to 204,861. The SMMT expects light CV registrations to be down 6.5% overall for the complete year. Practically all the growth in heavy truck registrations has been in the over 6.0 tonne GVW category for rigid vehicles, with registrations highest in the over 16 tonne GVW sector, with growth of 24.0% in 2012 to 10,181. Articulated tractor unit registrations have been in decline in all sectors so far this year, with registrations down 7.6% overall to 13,433.

Ford has dominated the UK light CV market for almost 50 years, with the Transit the best selling model for the past 47 years. 

Ford registrations were down 9.43% during the January to October period to 54,753, compared with 25,661 for second placed VW, ahead of Vauxhall with 22,841.

Daf Trucks, the US PACCAR subsidiary, leads the heavy truck sector over 6.0 tonnes GVW with 9,687 registrations for the January to October period, up 28.4% on 2012. Mercedes is in second place with 5,124 ahead of Scania, MAN and Volvo Trucks.

Car taxation is relatively complex with a range of taxes applied to the purchase price of a new car and a system of annual taxation called Vehicle Excise Duty (VED). For new cars, the system is based on CO2 emissions with 13 separate tax bands, ranging from zero for cars with emissions of up to 100g/km to £465 (€580) per year for cars with emissions exceeding 255g/km.

Taxes for company cars – those provided by employers for use by employees – are also based on CO2 emissions and based on a taxable formula with rates that have been progressively changing for a number of years. The taxable rate also depends on the employee’s salary. Despite the fact that diesel cars produce lower CO2 emissions than petrol-powered models, they also carry a tax penalty of 3% compared with a petrol model in most cases, where company car tax is concerned, although this will change in tax year 2016/17, when petrol and diesel models will be treated equally from then on.

Fuel taxation is high in the UK, helping to make fuel costs among the highest in Europe. Both fuel duty and VAT at 20% are levied on fuel, meaning that around 66% of the total cost is accounted for in taxation. Information from the UK Automobile Association (AA) suggests that the UK has the eighth highest price in Europe for petrol and the second highest for diesel. At the time of writing, petrol prices are around €1.72 per litre and diesel around €1.80 per litre.

Not surprisingly, this has an impact on the size of car that most UK customers choose. In 2012, demand for small cars has grown rapidly, partly in response to new model launches. SMMT information shows that the Mini segment has grown by 52%, while the Supermini segment has grown by 5.8%. The SMMT suggests that taken together, these two segments account for almost 40% of the new car market.

On these figures, it is not surprising that the Ford Fiesta is the best-selling car in the UK with 96,805 registrations to the end of October, ahead of the Vauxhall Corsa, Ford Focus, VW Golf and Vauxhall Astra. 

Ford dominates in the car sector as it does in light CVs, recording registrations up 5.15% to 245,109 for the January to October period. Vauxhall took second place with 197,721 registrations, down 3.14% on 2011. VW took third place with 160,200 registrations. Among the premium brands, Audi has registered the most in 2012 with 110,622 registrations, ahead of BMW on 107,651 and Mercedes-Benz on 79,923, up 10.7%, 8% and 12.6% respectively.

Korean producer Ssangyong has recorded the largest percentage increase of the year, with an increase of 963.4% to 755 from 71 last year, as it revived its import operation. SsangYong’s Korean rivals performed as well in the UK as they have done elsewhere this year. Kia has seen registrations rise 21.5% to 57,736 and Hyundai 16.7% to 62,980.

Among ‘home’ brands, Land Rover has had a good year, as it has elsewhere in Europe, thanks to the Range Rover Evoque. Registrations are up 33.4% to 42,312.