The UK automotive sector is facing deep structural rather than cyclical challenges. These include weak volumes and revenues, international tariffs and increasing competition from Chinese manufacturers and brands, leadership and succession challenges, and technology and EV transition risks. These are compounded by uncertainty and other risks (cyber, supply chain, macroeconomic) that lead to decision-making paralysis, short-term firefighting and stalled investment despite urgent need for strategic change.

Day-to-day costs such as energy and labour costs are high, and in funding terms revenue levels make cashflow funding and equity investment difficult. Whilst the sector had been attractive to asset-based lenders, this has to some degree been used to support working capital, less for capital and technology investment. There is some sense that the sector is in waiting mode for a largescale policy fix or for volatility to normalise.

Automotive suppliers based further down the chain (Tiers 2 and 3) are less able to navigate capital and supply chain pressure and therefore more likely to experience financial distress, despite the strategic importance of the Tier 2 supplier layer.

Against the above challenges, the UK automotive sector has continued strengths, with low volume, high value heritage, specialist and luxury brands. There are also lateral cross-sector opportunities in areas like defence or broader technology such as data centres. The automotive sector also has highly skilled workforces and is important for regional and local employment, particularly in smaller Tier 2 suppliers.

APPG Inquiry

The APPG for Turnaround and Business Improvement is therefore launching a Call for Evidence as part of a targeted inquiry:  Championing the UK Automotive Supply Chain:  what do we need?

The Call for Evidence and inquiry will focus on two aspects:

1. How to encourage SME Tier 2/3 suppliers to engage with support and transform operationally and strategically to build their resilience and access new opportunities
2. What support is needed from government in terms of policy for the sector and in supporting best use of investment.

Submissions are invited in response to the below Call for Evidence questions by midnight on 17^th November 2026.

Submissions should be sent via email to nstickland@the-ift.com

All submissions will be handled in accordance with the APPG’s data protection and privacy policy. Please indicate in your response how you wish to be attributed and whether you are happy for your evidence to be attributed or if you would prefer it to remain anonymous.

General

1. What are the UK’s key strengths in the automotive sector, particularly at the level of smaller suppliers?
2. What automotive components and capacities should we focus on for the future of the sector?
3. How can we gain a better understanding of where distress is concentrated and where support may be needed, particularly for smaller suppliers?
4. What could be key operational KPIs for OEMs/Tier 1s/stakeholders to be aware of to spot distress in Tier 2/3 suppliers at an earlier stage?

Policy and investment

5. What should a strategy for the UK automotive sector addressing the needs of smaller Tier 2/3 suppliers look like?
6. Where should government investment and policy focus be targeted to support transformation for smaller suppliers?
7. Is available government funding reaching smaller suppliers at Tier 2/3?
8. How can the government encourage greater and more effective private investment into the sector for all levels of supplier?
9. How can the government ensure that foreign investment benefits smaller suppliers, UK skills, jobs and competitiveness?
10. How can government policy and funding support the professionalisation of smaller suppliers?

You do not need to answer every question; please answer the questions relevant to you or your organisation.

Evidence and findings will be used to develop recommendations for government and for the sector, to engage with smaller suppliers.