The next Prime Minister has been warned by the UK auto industry’s trade body that a ‘no deal’ Brexit will cost carmakers millions of pounds per day.
A new report, published by the Society of Motor Manufacturers and Traders (SMMT) yesterday (Tuesday, June 25), calculates that delays to production caused by friction at the border could add up to £50,000 a minute for the sector.
SMMT’s 2019 UK Automotive Trade Report says that the end to borderless trade could bring crippling disruptions to the industry’s just-in-time operating model, with every delay of a minute costing £50,000 in gross value added – amounting to some £70 million a day in the worst case scenario.
Combined with WTO tariffs, which for trade in passenger cars alone amount to £4.5 billion a year, would seriously damage the sector’s competitiveness, it says.
Speaking at the industry’s annual International Automotive Summit in London yesterday, SMMT chief executive Mike Hawes said that ‘no deal’ remains the “clear and present danger”.
“We are already seeing the consequences of uncertainty, the fear of no deal,” he said. “The next PM’s first job in office must be to secure a deal that maintains frictionless trade because, for our industry, ‘no deal’ is not an option and we don’t have the luxury of time.”
Automotive is the UK’s single biggest exporter of goods, trading with some 160 countries worldwide, and accounting for more than 14% of total exports.
The sector is one of the country’s most valuable economic assets, says SMMT, directly employing 168,000 people, supporting communities and delivering an annual £18.6bn to the public purse.
However, the report also calculates that the right deal, backed up by ongoing collaboration to create a competitive business environment and thriving market, and combined with an ambitious automotive-focused trade strategy, could trigger a 20% uplift in the industry’s global trade value – worth £20bn, if the sector can maximise its full capacity.
SMMT’s first-ever UK Automotive Trade Report charts the rise of the sector over 40 years, outlining current and future challenges and opportunities for trade with Europe and globally.