Car industry no-deal Brexit warnings grow stronger

Britain’s car industry has called on the government to maintain frictionless trade at borders in the event of a hard Brexit, to avert a catastrophe that could cost car makers £70 million a day.

The Society of Motor Manufacturers and Traders (SMMT) warns that leaving the European Union without a trade agreement will cause border delays that will see the UK’s car industry incur costs of almost £50,000 a minute.

“We thought when we came to 2019 we’d have a degree of certainty; obviously we’ve not, we’re in the midst of a Conservative contest,” said Mike Hawes, chief executive of the SMMT.

As part of its 2019 UK Automotive Trade Report, the organisation revealed that in a single day, the UK car industry sees 1100 EU trucks delivering to car and engine plants, carrying £42m worth of components. Additionally, 4800 cars and 6500 engines are exported from the UK to global markets every day. The vast majority of these shipments do not require border checks.

Any new customs barrier in the UK’s trading relationship with EU markets threatens to jeopardise the car industry’s just-in-time operating model. The SMMT cautions that more inventory would have to be stocked at plants in the UK. 

Additionally, if the UK is no longer part of the EU customs union and single market, all companies, regardless of their trade, will have to introduce and manage detailed and time-consuming customs declarations.

Last year, the five most popular cars built in and exported from Britain were led by the Nissan Qashqai, followed by the Mini hatch, Honda Civic, Toyota Auris and Land Rover Range Rover Sport. Europe was the UK’s largest export market, then America, China, Japan and Turkey. More than £18bn a year is said to be contributed to HM Revenue by the industry, and 168,000 people are employed around the automotive space.

“We have world-famous brands producing high-value goods, creating skilled jobs”, said Hawes. “Our success has at its foundation free trade…Brexit remains the clear and present danger to the industry. No-deal is not an option.”

To help safeguard the automotive manufacturing – estimated to generate £101 billion of annual trade – the SMMT made recommendations for government and industry.

It called for a forward-looking automotive trade strategy that accounts for new-generation vehicles and automotive technologies; preservation of current market access; stronger industry engagement; enhanced regulatory discussions and an upgraded domestic customs system and further fostering of trade promotion.

At the same time, both Hawes and Alex Smith, of the Volkswagen Group, called on the government to help car makers and consumers achieve a zero-emissions economy. “The government must match their [manufacturers] long-term ambition with long-term commitment; infrastructural investment, long-term incentives, fiscal support for new technologies,” urged Hawes.

“When we bring ID 3 to the UK, we will hand it over to the customer as carbon neutral. We will have eliminated or offset all of the carbon production in the supply chain and logistics. What’s really key then is for the customer to make the car carbon-neutral for the rest of its life,” echoed Smith.

Referring to the challenge of the government leading the UK to net zero, Chris Stark, chief executive of the Committee on Climate Change, said: “If I’m being honest, I think that government is bewildered by the size of the task.” Stark outlined how the supply of electricity would need to be doubled to account for demands from electric vehicles and homes with electric heating.

James Mills

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