Since Brexit was announced, a number of industries have been preparing for the worst possible outcomes and car manufacturers are no different. MPs have recently warned that the UK government needs to put the automotive industry at the centre of Brexit negotiations or risk the loss of jobs and a substantial amount of investment money. According to a report by the Business, Energy and Industrial Strategy (BEIS) committee, Brexit is detrimental to the sector, with the best outcome being ‘damage limitation.’
The committee stated the UK needs to maintain the closest possible relationship with the existing EU regulatory and trading framework for car manufacturing. Labour MP and BEIS Chair Rachel Reeves explained the situation. “The car industry is one of the UK’s great manufacturing successes. Innovative and efficient car plants across the country provide thousands of jobs and the automotive sector is a major contributor to our economic growth. There is no credible argument to suggest there are advantages to be gained from Brexit for the UK car industry.”
She went on to say “the prime minister now needs to ensure common sense pragmatism prevails and spell out the government’s intention to seek continued regulatory and trading alignment with the EU in the automotive sector.”
The BEIS released a report called The Impact of Brexit on the Automotive Sector, stating it was naive to expect trade expansion to outweigh a loss of trade. The report concluded with good access to the EU single market being of the utmost importance for jobs and investment rather than securing the freedom to secure trade deals with individual countries.
The Society of Motor Manufacturers and Traders (SMMT) has estimated that trade barriers for the UK car industry would lead to a £4.5 billion loss in export profits. It’s worth noting that around 80% of UK produced cars are exported overseas, with 56% going to EU countries. SMMT has also warned that barriers could cause problems for supply chains, making the UK a less competitive place to design automobiles.
The warning by MPS follows a similar trend of car manufacturers predicting their own losses. Aston Martin and Ford have both said they could stop producing cars in the UK in the wake of a hard Brexit.
Brexit uncertainty has led to the car industry abandoning a target to build more than two million cars a year by 2020. The unpredictability of Brexit has been felt by many manufacturers, but only time will tell what the ultimate result is.
