Companies supplying components and other goods to car firms plan to invest £225 million in the next three years, but many say skills shortages could hold back their growth, a report has shown.
The sector suffered significant setbacks in past decades but is now undergoing a renaissance, with two out of five of the components in the average British-built car now sourced locally, up from 36% in 2011, said the Society of Motor Manufacturers and Traders (SMMT).
Skills shortage are one of the biggest concerns, with two in five companies saying the availability of skilled workers, apprentices and graduates could impede their company's growth in the next three years.
Other barriers to growth include exchange rate inconsistencies, competition from overseas, energy costs and difficulty securing funding.
Mike Hawes, SMMT chief executive, said: "Britain's car industry is booming, exporting more than ever, and it's encouraging to see this opening up huge opportunities for the UK supply sector.
"A strong domestic supply chain is critical to a successful automotive sector and we are confident that, with the right political and economic conditions, significant supply chain investment can be secured, delivering more jobs and growth.
"Many of the UK's competitors have far larger and stronger supply sectors, however, so continued government collaboration through organisations such as the Automotive Council will be critical as we strive to re-shore more supply chain work."