British cars are being made with an ever-increasing proportion of domestically-sourced parts but UK companies in the automotive supply chain are still missing out on £4 billion of potential business each year.

The rise of the UK supply chain and the opportunities it has yet to capitalise on have been highlighted in a new Automotive Council report ‘Growing the Automotive Supply Chain – The Opportunity Ahead’.

The report reveals domestic component makers, many of whom are based in the Midlands, sold 19 per cent more products to UK vehicle producers in 2014 than they did in 2013.

The report also identifies a further £4 billion-per-year opportunity for UK automotive suppliers to expand their business in the coming years.

Currently around a third of the components in a UK-built car are domestically sourced, compared to more than 90 per cent in the mid-1970s when the industry was at its height.

The opportunities for suppliers to increase their output comes as vehicle manufacturing in the UK is enjoying rapid growth.

British car production has increased by more than 50 per cent since 2009, with Midland manufacturers like Jaguar Land Rover leading the way.

Bentley in Crewe has also expanded its operations, while volume Japanese manufacturers Nissan, Honda and Toyota have seen production soar at their factories in Sunderland, Swindon and Burnaston.

A total of 1,528,148 cars were manufactured in the UK in 2014 – a 1.2 per cent increase on the previous year.

The latest Automotive Council report was presented at this week’s Society of Motor Manufacturers and Traders’ Open Forum event, which saw hundreds of automotive companies gather in Leicester.

Mike Hawes, SMMT chief executive, said: “A strong domestic supply chain is critical to the success of the UK automotive sector.

“We want British suppliers to capitalise on the renaissance in vehicle manufacturing, and these figures show that positive strides are already being made.

“The work of the Automotive Council is central to this progress, and will continue to be while many component manufacturers still face issues such as access to finance and lack of incentives to innovate.”

The SMMT said the upturn in the supply chain could in part be attributed to be UKTI’s Automotive Investment Organisation (AIO), set up to bring more foreign investment into the UK automotive sector.

Since 2013, AIO has delivered more than £768 million investment into the UK supply chain, creating or securing more than 10,000 jobs.

The UK automotive industry accounts for turnover of more than £64 billion and £12 billion value added. More than 160,000 people are employed directly in manufacturing and in excess of 770,000 across the wider automotive industry.

The industry accounts for 10 per cent of total UK goods exports and invests £1.9 billion each year in R&D.

More than 30 manufacturers build over 70 models in the UK supported by around 2,500 component providers.

One of those is Brose Coventry, part of the German-based family-owned automotive supplier which produces mechatronics systems for vehicle doors and seats as well as electric motors.

Brose Coventry was the first production site to be set up outside Germany and manufactures window regulators and seat adjusters for Jaguar, Land Rover, Toyota, Volvo and Ford.

It is estimated the continuing increase in UK vehicle production has created an opportunity for Brose UK to grow its business with UK manufacturers and suppliers by more than £100 million in the next five years.

The firm recently announced a £35 million investment which will expand its Coventry site by 120,000 sq ft and create around 370 new jobs.

This investment will enable the production of car seat frames, door components and associated mechatronic components to meet increasing UK and European demand.

Brose successfully applied for over £3 million of UK Government support for this project via the Regional Growth Fund.

Juergen Zahl, managing director of Brose, said: “We were delighted to receive such strong support from the UK Government for our investment into the UK supply chain.

“The Government’s close cooperation has been fundamental to ensuring we can drive forwards our UK business successfully.

“We are aiming to open our new facility by early 2016, giving us the platform to win future business within the Brose group.”