SMMT reveals impact of bad Brexit
The Society of Motor Manufacturers and Traders (SMMT) has revealed new independent figures highlighting the cost of a bad Brexit, and called for an ambitious, world-beating trade deal.
Speaking at the 103rd SMMT Annual Dinner in London, SMMT president George Gillespie said: “The automotive sector is going through a period of unprecedented change and we must not let the pressure of Brexit deflect from our focus on a coherent national industrial strategy.
“Collaboration between industry and government must be stronger than ever… We want to work closely with the next government, as we have in the past; united in a common purpose to keep UK Automotive a global player that drives employment, creates wealth and gives all of us pride in what we can do here.”
The SMMT said independent research shows WTO tariffs on imported components and exported vehicles would add more than £3.2bn a year to UK automotive manufacturing costs.
It warned that such a colossal increase – equivalent to almost 90 per cent of the sector’s annual spend on R&D – could not be absorbed, forcing prices to rise and global demand to shrink.
The analysis estimates the impact of such tariffs could result in the cumulative loss of more than 1.5 million units from UK production volumes over the next five years, worth some £42.7bn at factory gate prices. Under this scenario, by 2024, falling demand and model reallocation to more competitive and welcoming production locations would see annual output falling to one million vehicles per year.
Mike Hawes, SMMT chief executive, 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 so we can deliver our goals: cleaner air, zero carbon emissions, and the ability to go on building our products and marketing them globally.
“Rather than producing two million cars a year by 2020, a no trade deal, WTO tariff worst case scenario could see us making just a million. The next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain.”
