No Brexit trade deal ‘will cost UK car industry £55bn’

Tuesday, 24th November 2020, 2:55 pm
Updated Tuesday, 24th November 2020, 2:56 pm

Leaders of the UK car industry have warned that failing to secure a trade agreement with the EU could cost the country £10 billion a year between now and 2025.

The Society of Motor Manufacturers and Traders (SMMT) has urged negotiators on both sides of the Brexit talks to put the automotive sector “at the heart” of negotiations or risk causing massive damage.

In an address to industry, politicians and journalists, the SMMT’s leaders said that failing to secure a favourable deal for the import and export of vehicles could cost the UK auto sector £55.4bn by 2025 and do a similar amount of damage to the industry in Europe.

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According to SMMT president and chairman Dr George Gillespie, falling back on default WTO tariffs of 10 per cent could cut vehicle production in the UK by two million units in the next five years and add £2,800 to the price of a European-built EV in the UK, just as the Government announces an impending ban on petrol and diesel cars. He also warned that a lack of a trade deal could significantly harm the industry as struggles to recover from the impact of the Covid pandemic.

The SMMT warns that a lack of a deal could make the UK auto industry uncompetitive (Photo: Shutterstock)

The car industry has faced huge difficulties during 2020 as factories and dealerships were forced to close due to the pandemic. New car registrations in the UK are down 31 per cent compared with 2019 and car manufacturing has fallen 36 per cent. Dr Gillepsie said the pandemic had cost the UK auto industry £28bn.

Dr Gillespie said: “Industry can deliver the jobs growth we need and help rebuild a devasted economy, but government must work with us to create the environment for this success. That starts with a favourable Brexit deal and a bold strategy to help transform automotive production in the UK, attract new investment, upskill our workforce and build world-leading battery capability to future-proof our manufacturing. When Covid lifts, we need to be ready; ready to support government to engineer an economic – and green – recovery.”

The SMMT warned that as well as putting jobs in the manufacturing, supply and sales sectors at risk, a failure to reach a deal would have a “severe impact “on the sector’s ability to develop and manufacture the next generation of zero-emission cars and vans.

SMMT chief executive, Mike Hawes, said, “The Government’s plan for a green industrial revolution is an immense challenge – for automotive, the energy sector, consumers and for government itself. We are already on the way, transforming an industry built on the combustion engine to one built on electrification. But to complete the job in under a decade is no easy task. And with showrooms closed, choking factories of orders, the ability of the sector to invest further is severely constrained.

“Automotive is nothing if not determined, adaptable and resilient, yet, as the clock ticks ever closer to midnight on Brexit negotiations, the competitiveness and employment we need get back to growth – green growth – hangs in the balance.

“In 37 days we leave the single market, yet we still do not know exactly what will happen. Will there be a deal? What will our trading conditions be? Can we compete? We need that deal.”

As the car making industry turns its focus to EVs, the SMMT estimates that WTO tariffs would add £2,000 to the European price of a UK-built EV such as the Nissan Leaf or upcoming Jaguar XJ, making UK plants less competitive. There have been rumours that Nissan’s Sunderland plant, where the Leaf is built, could be threatened with closure without a trade deal but Nissan has refuted the claims.

Speaking at the same event, Alok Sharma MP, the Secretary of State for Business, Energy and Industrial Strategy said: “Our negotiators have been working tirelessly to agree a deal with the EU. Our aim remains a zero-tariff quota-free, free trade agreement.”