Brexit is the “biggest threat in a generation” to the UK’s booming car industry, auto manufacturers have warned.
Car makers said yesterday that the £72bn-a-year industry, which exports more than half of the 1.7m cars it produces each year to Europe, will be at risk if the government does not agree a tariff-free trade deal with the EU during the Brexit negotiations.
The announcement came as the government triggered Article 50 to formally begin divorce talks between the UK and the EU.
“Triggering Article 50 has started a race against time to secure a deal that safeguards the future of the UK automotive industry,” said Society of Motor Manufacturers and Traders (SMMT) CEO, Mike Hawes.
“Government has committed to creating and supporting the right conditions for our industry to be successful. That means certainty in our relationship with our biggest market, tariff-free and open borders so products, parts and investment can flow freely.”
Last year UK car production hit a 17 year high and the industry is one of the Britain’s most significant exporters, making up 12 per cent of the nation’s total exports.
However, car makers are concerned because without a trade deal, every vehicle they export to the EU could be hit by a 10 per cent tariff.
UK car buyers would also be hit by price rises of around £1,500 per vehicle, the SMMT said.
Nor is it just finished cars that would increase in price. Around 70 per cent of the components in UK-made vehicles come from abroad. A large proportion of the parts come from within the EU.
Currently vehicle components can move seamlessly between European nations, without levies, barriers or paperwork. This may not be the case for UK car manufacturers after Brexit.
The SMMT says that the auto sector, which employs around 170,000 people directly and supports another 600,000 jobs across the supply chain, could see total import and export costs increase by £4.5bn – putting jobs at risk.
The auto-industry must be “at the heart of negotiations” said Hawes.
He added, “We will continue to work with government and our European counterparts but no deal is not an option – now is the time for government to deliver.”
Individual car makers have also spoken out, including Ford, which has huge engine manufacturing plants in both Dagenham and South Wales.
Head of Ford’s European operations, Jim Farley, said the government must secure “an ambitious Brexit deal that maintains strong EU and UK economies”.
He said, “Any deal must include securing tariff-free trade with the wider customs union and not just the EU27, whilst retaining access to the best talent and resources.”
“Given the short timeframe for negotiations, it is critical that a transitional period is put in place to ensure that customers are not penalised”.
The UK’s largest car maker, Jaguar Land Rover (JLR), said it was also concerned about immigration controls restricting the recruitment of skilled staff from the EU. The UK is currently going through a skills crisis.
Unite general secretary, Len McCluskey said, “I appeal again to the Westminster government and Theresa May to make it categorically clear without delay that there will be tariff-free access to the single market and customs union.
“The prime minister must act because the very future of UK manufacturing, including car making, is at stake.”