Yahoo Finance No-deal Brexit could cost UK car industry £55bn
Britain crashing out of the EU without a free trade deal and the imposition of World Trade Organisation (WTO) rules would cost UK carmakers £55bn over the next five years, it is claimed.
The Society of Motor Manufacturers and Traders (SMMT) issued the warning as it delivered a last-ditch appeal to the Government to thrash out a deal with Brussels.
The trade body warned that WTO rules would mean a 10pc tariff on vehicle exports, pushing up the price of British-built cars.
This would hit foreign sales and mean car production in the UK “consistently falling below 1m” a year.
Last year 1.3m cars were built in the UK, with 80pc of them exported, mostly to Europe.
Speaking at an online event on Tuesday in place of the society’s annual dinner, SMMT president George Gillespie said: “We need a future trading relationship that works for automotive. We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost 28 times that to Covid.
“Let us not also be left counting the cost of tariffs, especially not by accident.”
Even a “bare bones” Canada-style deal would mean a £14bn hit, according to the SMMT, highlighting the interconnected supply chains the industry depends on and its just-in-time manufacturing processes, without border and customs controls.
The trade body said even this lower figure shows how “for the automotive sector, Brexit has always been an exercise in damage limitation”.
The SMMT urged the Government to “stretch every sinew” to agree a deal, saying that prior to the Brexit vote, the UK had been forecast to hit car production of 2m this year.
Coronavirus’s impact and Brexit concerns mean that production is unlikely to hit 1m this year, the trade body predicts.
Electric avenue
Mr Gillespie welcomed the Government’s plans for a green revolution, with the car sector in its vanguard.
He said: “Some politicians and commentators like to paint the automotive sector as environmental villains rather than the environmental heroes we actually are.
“Do not make us the scapegoats when we are the people providing the solutions. The road to zero is one our industry was walking along many years before today’s advocates had even found it on a map.”
The society president warned that it the UK is going to play its part in the development of green technology, the country needs to be able to attract international R&D investment and be competitive on a global level, as well incentives for customers to purchase zero-emission cars.
In a speech at the event, Business Secretary Alok Sharma said he “understood how important it is for the sector to have certainty” about future trading conditions.
He added: “Negotiators have been working tirelessly to agree a deal. Our aim remains a tariff and quota free trade agreement.”
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