Motor vehicle works
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This section applies to large industrial premises occupied by Automotive ‘Original Equipment Manufacturers’ (OEM). These range from very large fully integrated works featuring press, weld, paint and general assembly buildings in excess of 300,000sq.m occupied by large international companies to smaller often premium manufacturers mainly involved in the assembly operation which could be only 30,000sq.m.
List description: motor vehicle works and premises
Primary description code: IF2
Scat code: 192
Scat suffix: as a split class the appropriate suffix letter should be either V (for large motor vehicle works), or S (for the smaller works).
Responsibility for the valuation and referencing of this class of property lies entirely with the industrial, Commercial and Crown team (ICC) within the National Valuation Unit (NVU).
Responsibility for ensuring effective co-ordination lies with the NVU.
Case law is now of limited assistance in this class of property. In Alvis Ltd v Paver (VO) (1970 RA 118) rental and comparable evidence was applied having regard to “the construction of the building, clearance height, the stanchion grid, natural lighting, roof linings, floor loading limits and roof loading”. The case of Austin Motor Co Ltd v Woodward (VO) [1968] RA LT 133) dealt with the assessment of the Longbridge Works in Birmingham, emphasising the importance of height, stanchion grid and the effects of disabilities on value. Although requirements are very different from those of the 1960s and 1970s the same principle applies.
Basis of measurement for motor vehicle works is GIA
6.1 Safety on site
Caseworkers visiting this type of property for an inspection or other reason should wear the appropriate PSE, and ensure they are aware of all the VOA guidelines on health and safety.
Minimum requirement:
- safety boots and glasses
- high viz clothing
- long trousers and long sleeved shirts
Ear defenders will also need to be worn in press shops though these are generally provided.
Sites will have a formal health and safety induction process, this must be undertaken and allowed for when fixing appointments. Individuals should comply with all safety rules and precautions prescribed by the site operator without exception.
In particular, it’s important to maintain very high levels of awareness, be alert for the risk of trips and falls, also never touch exposed pipes or other elements of production equipment, particularly those with moving parts such as conveyors.
There are also a very high number of fork lift truck movements within buildings and around loading/unloading areas.
Within production areas clearly marked passenger routes are shown on the floor with defined crossing points, departure from such zones should only occur with permission.
The use of digital recording devices should only be used if authorised by the site operator.
6.2 Background - how a large integrated motor vehicle works operates
A fully integrated large motor vehicle works would generally feature the following functions:
Press shop: the press shop marks the beginning of the production process. Powerful presses shape chassis parts from precisely cut metal blanks. The dies create automobile parts such as side frames, doors, bonnets and roofs from various thicknesses of metal.
Body/weld shop: industrial robots are now used extensively in chassis construction. A chassis consists of many units that have been previously assembled into complete modules on individual welding lines. The under body, consisting of the front end, rear end and floor pan, is assembled together with the side framing and roof into a “body-in-white”. Doors, engine cover, sidewalls and tailgate complete the chassis. Some premium models are now glued as opposed to welded.
Paint shop (Lofty multi floored generally purpose built): the paint process is a two-stage operation comprising a pre-treatment and top coat paint process.
Pre-treatment: prior to any paint applications the unpainted body has to be pre-treated in order to obtain a clinically clean surface. A zinc phosphate coating is applied to the body shells before a corrosion protection layers is applied using the cathodic dip painting method. This coating is then baked in dryers, after which the second coating, the so-called “primer”, is applied.
Colour: after the primer has been baked, the topcoat (base coat) in the colour desired is then applied. Primer and topcoat (base coat and clear lacquer) are then applied by robots using high-speed rotary atomizers. Electro-statically charged paint particles are sprayed over the earthed body shell and the interior of the vehicle to minimise paint use in a series of generally stainless steel lined booths. Once the body shells have left the paint booths a transparent clear lacquer is applied. This last coat increases the chemical and mechanical stability of the surface and gives the paintwork its shine.
To assure the quality of the paint finish, the painted body shells finally pass through specially illuminated testing stations where operatives examine the entire body surface before the body shells are then sent to the assembly department.
General assembly: painted chassis are fitted out with all the features and fittings personal to each vehicle in this area. Individual assembly units and components such as motors, transmissions, axles, doors or fenders are pre-mounted in separate areas or brought from off site on a ‘just in time’ sequenced delivery basis. Heavy components like seats or pre-mounted doors are moved with handling equipment to optimise ergonomic activity at the workplace and once again brought from offsite. The car bodies are moved along the line by either floor conveyors or cradles hung from overhead conveyors. A marriage conveyor merges the powertrain with the car body. Additional paint rectification booths correct any minor imperfections caused by damage in the assembly hall.
After the vehicle is complete it is tested initially through a series of booths and machines within the assembly hall before a short proofing along a ‘rattle and squeak’ test track.
In addition to the above a fully integrated works may also include:
- an engine plant
- a plastics shop (part multi floored)
- sequencing warehousing for components in the general assembly hall
- finished product car parking areas
- rail heads for despatch
6.3 Motor vehicle works can broadly be divided into 3 categories:
(i) Modern purpose built works built from the 1980s onwards. These works are on green field sites and manufacture a number of models.
(ii) Older post war purpose built works. These factories whilst benefitting from substantial investment over the years retain much of the original fabric and style. They tend to have a network of suppliers on adjoining industrial estates close to the works and good transport links. These tend to manufacture a limited range of models.
iii) Mixed aged sites featuring substantial manufacturing buildings which were constructed before the Second World War but have been substantially extended in recent times. The modern element can now account for the majority of the manufacturing space on site. Whilst the original works were constructed before 1939 these are relatively well located. These tend to manufacture a number of popular Models with a strong British association and the popularity of these has led to the investment and expansion
All the above have redeveloped their paint facilities since the 1980s for environmental reasons as the industry moved from solvent to water based paint processes.
The industry has also moved towards a tiered structure over the past 20 years. The manufacture of components and sub-assemblies is generally subcontracted out, with motor vehicle works concentrating on vehicle assembly.
6.4 Unit of assessment
The identity of the occupier, the purpose of occupation and the extent of property occupied at a motor vehicle works is normally quite straightforward. However it is worth highlighting circumstances where further investigation may be necessary to determine the correct unit of assessment.
There has been a trend for the sequencing of components for the general assembly hall to be subcontracted to specialist companies. Warehouses on supplier parks which are owned by the motor manufacturer and contiguous to the main works are ‘let’ or ‘licensed’ to 3rd parties. Where there is a significant degree of control by the OEM an issue of paramount occupation can arise. Normal unit of assessment rules apply. In all circumstances the guidance found in Rating Manual: section 3 part 1 - hereditament should be followed.
6.5 Plant and machinery
Large motor vehicle works contain a considerable number of items of plant and machinery named in the relevant Valuation for Rating (Plant and Machinery) Regulations. Rateability should be tested in accordance with the principles set out in Rating Manual: section 6 part 5 - plant and machinery.
In most respects motor vehicle works are large industrial premises with traditional physical characteristics, however some may contain some uncommon items of plant and machinery such as:
a. Paint shop booths, shelter, ovens, dip tanks, Advice should be sought from the Motor Vehicle Works Lead Valuer in the NVU.
b. Overhead Crane Gantries. (Press) Frequently gantries are served by more than one traveller, the maximum lifting weight should be identified.
c. Supporting steelwork to overhead conveyors and lifters. (Weld and General Assembly). The weight of the steelwork should be calculated and recorded.
d. Pneumatics, (compressors, receivers, dryers, ring main pipe work), Hydraulics and Generators
e. Extensive pit work (all areas). This will be of variable shape, depth and potentially floor thickness with usually a cover plate so that it is not possible to record on site. Accordingly pit work drawings should be sought from the occupier in advance.
f. High Voltage switchgear. An electrical schematic should be sought to verify the extent of rateable switches. For those deemed rateable the number, age, type, rating and rupture capacities of each switch should be recorded.
Generally rating surveys should be recorded manually in binders held by the NVU Industrial, Commercial and Crown team. For smaller works it may be more appropriate to be recorded survey details electronically and store them in EDRM in the property file for the appropriate hereditament.
Motor vehicle works are valued using the indirect rentals basis. This replicates the approach to the aircraft works class. Whilst there is no reliable rental evidence of a large motor manufacturing and aviation works sites, values are set by comparison with large industrials in the locality.
Utilising this method of valuation gives consistency between various tiers of the automotive and aviation industries and the general manufacturing sector. All manufacturers are supported by ‘suppliers’ either locally, nationally or internationally, who occupy similar style buildings often in close proximity to the main manufacturer and will always be assessed on the rentals method of valuation.
Valuations for the large motor vehicle works are held on bespoke spreadsheets on a secure drive by the NVU ICC team. Due to the number of line entries and the sensitivity of the information held they are not suitable for inclusion on the CDB or Non-Bulk Server (NBS).
1. Market Appraisal
Car production in terms of volume reached its highest level in 17 years in y/e December 2016. Since that date production has fallen, with a significant fall in 2020 due to the COVID 19 pandemic.
In terms of volume in comparison with car production, commercial vehicle production is low. Production has fallen since 2018 however the decline in 2020 due the COVID19 pandemic was not a pronounced as the car factories.
Both car and commercial vehicle production are reliant on exports, with the EU being the biggest market.
2. Changes from the last Practice Note
With the exception of the market appraisal, there are no changes from the 2017 Practice Note.
3. Ratepayer Discussions
There have been no discussions with the Motor Vehicle Industry.
4. Valuation Scheme
There is no scheme of valuation for Motor Vehicle Works. They are valued using the indirect rentals basis. This replicates the approach to the Aircraft Works class. As there is no reliable open market rental evidence of a large motor manufacturing and aviation works sites, the tone is set by comparison with large industrials in the locality.
Market Appraisal
The numbers of vehicles produced in the UK to year ending 31st March 2015 held steady at 1.6 million, with a slight increase in car output offset by a small fall in commercial vehicles. The UK industry also produced 2.5 million engines and is the fourth largest global manufacturer of construction equipment (off-highway vehicles), producing approximately 60,000 units per year. The UK is now the second largest vehicle market and fourth largest vehicle manufacturer in the EU. It is also the second largest premium vehicle manufacturer after Germany.
In value terms, output is rising strongly, up 7.5% on an annualised basis, and well above pre-recession levels. This is generated by a trend towards higher value vehicles, but also some increase in the supply chain business. Further growth in the supplier network is sought by manufacturers and Government. Only about a third of the parts that go into cars made in Britain are sourced here (though the figure is about 50% for Jaguar Land Rover (JLR)). By comparison, the figure in Germany is about 60pc.
Setting the auto sector in the wider UK manufacturing context, the latest ‘Index of Production’ figures from ONS show that only four manufacturing sub-sectors are generating more output now than at the 2007 peak, of which automotive is one. Britain is the base for more manufacturers than any other European country: seven volume carmakers, seven commercial vehicle manufacturers, nine bus and coach builders and is also the base for eight of the 11 Formula One teams Car manufacturing volumes are on course to break all-time records by 2017. The existing record was set in 1972 when 1.92m cars rolled off the line. That figure had declined to a level of about 1.6m in the years preceding MG Rover’s collapse in 2005, then plummeted to below 1m as the financial crash hit in Q3 2008.
Vehicle manufacturers in the UK export around 80% of production, 55% of which goes to the EU. Since 2010 China and Russia have overtaken the US for second and third spots in international sales. A decade earlier, China did not make it in to the top 10 for UK exports. David Bailey, professor of industrial strategy at Aston Business School in Birmingham, said there were a number of factors behind the success of UK car manufacturing: “It has bounced back quickly since the severe downturn in 2009, helped by the exchange rate depreciation, world-class manufacturing, excellent industrial relations and to an extent the government’s industrial strategy.” There are now no high volume British owned automotive manufacturers. Foreign owners came in, invested, and Britain’s car industry made the move to upmarket cars. Since 2013 carmakers from Germany, India, Japan and the United States have invested heavily (over £7bn) and pursued long-term strategies to revive iconic British brands. A key attraction for foreign investors was Britain’s EU membership and flexible workforce. The sector focus is however no longer just Europe. Manufacturers skilfully adapted to shifting global markets by developing products trading on British heritage at the premium end of car manufacturing such as JLR. These appeal to the new global rich and swelling middle classes in emerging economies such as China. For premium manufacturers such as BMW Group and JLR, approximately 40% of their vehicles are sold within the EU with the rest sold in non-EU markets. Sales to emerging markets are growing. UK automotive exports to China, for example, have increased more than six-fold between 2008 and 2013. However for other UK volume manufacturers such as Honda, Nissan, Toyota, and Vauxhall, the majority of exports are still within Europe. The EU market, therefore, will remain key for UK automotive manufacturers. At present both Honda & Toyota’s modern purpose built sites are operating well below capacity although both have recently been awarded new models which underlines the competitiveness of the UK location and the longer term view taken of occupation. The UK has also taken a lead in reducing carbon emissions and attracted significant investment for engine development (BMW, JLR, Ford) and more recently electric cars (Nissan) In April 2014 KPMG & SMMT published a report titled ‘’The UK Automotive Industry and the EU’’ (see below). It listed recent investment announcements, which ‘’effectively secure the production of models in UK factories in the medium-term, support the continued growth of the sector. New vehicles include:
- New MINI (November 2013).
- New Nissan Qashqai (January 2014).
- New Vauxhall Astra (2015).
- Announcements of plans for multiple new models, a new aluminium vehicle line at Solihull and engine plant in Staffordshire for Jaguar Land Rover.
- New models for the luxury manufacturers: Aston Martin, Bentley, Infiniti, McLaren, Rolls-Royce.’’
More recently, in April 2015, £1bn of investment in UK car manufacturing was announced in the space of seven days. China’s Geely revealed plans for a new £250m factory to manufacture black cabs, Japan’s Honda said it would spend £200m making Swindon the global hub for its Civic model, and JLR put the remainder into an engine plant and expanding its design centre. The combination of ‘Original Equipment Manufacturers’ (OEM) investment, R&D expenditure and the support of the UK Government through funding initiatives such as the Regional Growth Fund and the Advanced Manufacturing Supply Chain Initiative is expected to increase employment. Membership of the EU has always been significant to the sector for a variety of reasons though some reforms are sought. The attached report covers these concerns and benefits. Trade barriers and import tariffs affect the affordability of products for customers outside the EU particularly in emerging markets. This may lead to the expansion of assembly plants in China, Brazil and America with consequential effects upon UK operations.
2. Changes from the last practice note
There was no Practice Note for the 2010 Rating List.
3. Ratepayer discussions
There have been no discussions with the Motor Vehicle Industry.
4. Valuation scheme
The approach to Large Motor Vehicle Works for 2010 List has been subject to prolonged high level challenge and as yet those assessments are still unresolved. A lead case is likely to be heard at Valuation Tribunal to clarify the approach to this class for 2010 and by implication 2017.