No-deal Brexit and the resulting tariffs on light vehicles alone would add £5 billion to the collective EU-UK auto trade bill, said UK’s The Society of Motor Manufacturers and Traders (SMMT) in a statement on Wednesday (19).
“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 affecting demand, profitability and jobs,” 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, SMMT added.
“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. 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,” said Mike Hawes, SMMT Chief Executive.
“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,” he added.
The automotive sector is one of Europe’s most valuable economic assets, employing 13.3 million people and representing 6.8 per cent of EU GDP. The sector produces roughly 17 million cars in EU annually nearly a quarter of global passenger car production.
UK Automotive is a key component of this success. It is the EU’s second largest new car market- worth some £29bn to EU manufacturers every year- and the fourth largest car manufacturing nation. Alone, it turns over some £82bn, supports 856,000 jobs.
Some seven out of every 10 cars registered by UK motorists come from factories in Europe, meanwhile, UK car plants send more than 40 per cent of their output to the continent.
Without a withdrawal agreement, on March 30, 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, SMMT said.