UK carmakers are not prepared for Brexit, says the chief executive of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes. And the continued question mark around the manner of the UK’s exit from the EU means the industry is ‘increasingly concerned’ about the potential level of disruption to cross-border trade it could cause.
The concerns have been further exacerbated by figures released last month which show that nearly nine in 10 cars built in the UK last month were earmarked for export – the majority of which were destined for the EU. Output of UK-built vehicles fell by 47 per cent in June, compared to a 6 per cent rise in exports, which Mike Hawes calls ‘a reminder of the exports-led nature’ of the industry.
“No one would profess to being Brexit-ready because there are too many variables in there,” he said. “We need a deal. If we have no deal, there is no transition, there is no implementation period, that would kick in less than eight months away. You can operate on WTO [World Trade Organization] trade rules but it would be at a significant extra cost and burden than we currently enjoy.”
The British automotive industry provides employment for 186,000 people and has a combined annual turnover of £82bn. The SMMT has consistently called for continued membership of the single market and customs union, saying it cannot see any benefit for the industry from Brexit.
And there are very real concerns: if Britain leaves the EU with no deal it may be forced to resort to WTO rules that could leave its exporters facing big EU import tariffs of around 10 per cent.
Adding to the general confusion is the lack of clarity around the future taxation and regulation of diesel cars following the ‘Dieselgate’ emissions-rigging scandal. All of this has led to a ‘perfect storm’ which has seen a slump in overall car production – which fell by 5.5 per cent in June and has fallen by 3.3 per cent in the first half of the year.
"No deal… is just not an option," said Hawes. "It would be seriously damaging to the industry not just in the UK but in Europe as well."