The British automotive industry would be ‘devastated’ by a no-deal Brexit scenario, delivering 1.5 million fewer cars by 2025.
A Bleak Warning
The Society of Motor Manufacturers And Traders (SMMT) has issued a bleak warning concerning the future of the UK car industry. It claims its own research shows that, should World Trade Organisation (WTO) rules be adopted, 1.5 million fewer cars will be made by 2025; representing a loss of £40 billion in productivity. It also claims that the introduction of tariffs would cost the industry £3.2 billion a year; the equivalent of 90% of its research and development budget. In addition, the organisation claims that a combination of falling demand and production being shifted abroad would see annual production falling to 1 million; down from 1.3 million. Before the 2016 referendum, output had been steadily increasing, peaking at 1.7 million in 2016. The industry was expecting the production of 2 million vehicles per year by 2020.
Mike Hawes, SMMT chief executive, stressed the necessity of achieving a frictionless trade deal with the EU. He said, “UK automotive’s needs are clear: frictionless trade free of tariffs, with regulatory alignment and continued access to talent. Detailed trade negotiations have yet to begin. They will be complex and they will take time. But a close trading relationship is essential to unlock investment”. He added, “the next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain”.
A Never-Ending Story?
Ever since the 2016 referendum, the SMMT has offered gloomy pictures of the future of the nation’s car industry. Hawes himself has consistently warned of the dangers of a ‘no-deal’ and the need to end speculation. Neither he, nor his organisation, are alone in their melancholy. Ford and Honda have announced plant closures. Other manufacturers, like Nissan, have abandoned plans to produce new models in the UK. Some of these have cited Brexit as a factor in their decisions, others have spoken of broader problems. Some of these broader problems include declining global demand, tougher market conditions in China and the challenge of implementing electrification; especially given that few motorists seem to want to drive, let alone own, an electric car.
There’s no denying that Brexit, especially the speculation it’s caused, has damaged the car industry in the UK. But it’s also a fact that it’s coincided with broad and converging global conditions; many of which have taken their toll on manufacturers in Europe and beyond. Perhaps it isn’t a question of Brexit per say, but rather a question of providing the industry with clarity; in doing so, they’ll have a better understanding of what they face and, just maybe, will return to confidence and investment; WTO trade rules or not.
A Third Of The UK’s Automotive Firms Are Cutting Jobs – https://www.autoservefleet.co.uk/latest-news/a-third-of-the-uk-s-automotive-firms-are-cutting-jobs/
Automakers Proceed With Brexit Shutdowns Despite Delay – https://autoserve.co.uk/motoring-news/automakers-proceed-with-brexit-shutdowns-despite-delay/