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No-deal Brexit not an option for automotive, warns SMMT

Mike Hawes, SMMT chief executive

The Society of Motor Manufacturers and Traders has claimed that a no-deal Brexit will undermine the automotive sector’s ability to operate and “cannot be an option”.

Just a day after BMW announced that it had shifted the annual maintenance shut-down to April in 2019 in a bid to minimise the effects of "possible short-term parts-supply disruption", the SMMT urged Brexit negotiators to be pragmatic in securing a withdrawal agreement and transition which would “safeguard one of Europe’s most valuable economic assets”.

The UK trade body will today meet with EU representatives in Brussels to highlight the economic importance of the integrated European automotive industry and set out the repercussions for businesses, economies and jobs if a deal cannot be struck.

SMMT analysis suggests that no-deal and the resulting tariffs on light vehicles alone would add £5 billion to the collective EU-UK auto trade bill.

If passed directly on to consumers, import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700, and that of light commercial vehicles by £2,000, it claimed, affecting demand, profitability and jobs.

The SMMT added: “Similarly, UK buyers of a car or van from the EU would be faced with £1,500 and £1,700 increases if manufacturers and their dealer networks were unable to absorb these additional costs.”

Mike Hawes, chief executive of the SMMT, said: “Tariffs alone should be enough to focus minds on sealing a withdrawal agreement between the EU and UK but the potential impact of ‘no-deal’ means the stakes for the automotive sector are far higher.”

The automotive sector is one of Europe’s most valuable economic assets, employing 13.3 million people and representing 6.8% of EU GDP.

The UK is the EU’s second largest new car market – worth some £29 billion to EU manufacturers every year – and the fourth largest car manufacturing nation.

Hawes said: “Without a deal, there can be no transition period and the complex issues surrounding tariffs and trade, customs, regulation and access to talent will remain unresolved.

“Our industry is deeply integrated across both sides of the Channel so we look to negotiators to recognise the needs of the whole European automotive industry and act swiftly to avoid disruption and damage to one of our most valuable shared economic assets.”

SMMT data revealed that seven-in-10 cars registered by UK motorists come from factories in Europe, while UK car plants send more than 40% of their output to the Continent.

In addition to the 2.7 million cars and vans that cross the Channel both ways each year, the UK exports some £3.4 billion worth of components to help build these vehicles in Europe, and sources almost three times that sum from EU-based suppliers.

The SMMT’s statement said: “Without a withdrawal agreement, on 30 March 2019 this trade will, as a minimum, be severely disrupted – potentially halting production, undermining competitiveness and negatively impacting the industry in the UK and Europe.”

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