No-deal Brexit could cut UK car production by a third
The Society of Motor Manufacturers and Traders has warned that UK car production could fall by over a third should the UK leave the EU without a trade deal.
Figures from AutoAnalysis, drawn up on behalf of the SMMT, showed that in the absence of a free trade agreement with the EU, the UK would be forced to default to World Trade Organisation terms which would see the costs of car manufacturing go up by an extra £3.2 billion per year due to duties on imported car components and exports.
The analysis indicates that in order for the industry to account for rising costs, automobile prices would also need to increase and annual output could decline to around one million by the year 2024, a significant drop on the 1.52 million cars produced in the UK last year.
Speaking at the SMMT’s annual dinner this week, its chief executive Mike Hawes called for an "ambitious, world-beating Brexit trade deal" which would "maintain the sector’s competitiveness" as one of the UK’s most valuable economic assets and maintain its "ability to deliver innovation, productivity and prosperity for Britain."
He also raised concerns that the production of new automotive models that could have taken place in the UK could be moved to elsewhere.
Indeed, Honda and Ford have already announced the closure of UK plants, citing factors other than Brexit, while Peugeot is awaiting the outcome of Brexit before making a decision on the future of its Vauxhall car factory in Ellesmere Port.
Hawes said: “The next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain.”
He also emphasised the need for tariff-free trade with Europe for the automotive sector, along with "regulatory alignment" with the EU.
He said: “A close trading relationship is essential to unlock investment so we can deliver our goals: cleaner air, zero carbon emissions, and the ability to go on building our products and marketing them globally.
"Rather than producing two million cars a year by 2020, a no trade deal, WTO tariff worst case scenario could see us making just a million.”