£20 billion Brexit bonus if UK automotive industry avoids ‘no deal’

Britain is the world’s 10th biggest exporter but this position is at risk if a bad Brexit deal harms the UK automotive industry

Nissan Qashqai rolling off the Sunderland production lineA bad Brexit deal risks reversing a decade of UK automotive industry growth because of its dependence on free trade, said the £101 billion industry trade body’s chief executive today.

However a 20 percent industry boost is possible if the next Prime Minister secures a good Brexit deal and then works with industry.

Mike Hawes (pictured below), speaking at the Society of Motor Manufacturer and Trader’s (SMMT’s) international summit, said the next PM should prioritise frictionless trade.

SMMT chief executive Mike Hawes

“You cannot operate a ‘just-in-time’ network without frictionless trade,” said Hawes. Hard Brexit border delays risk a £50,000-per-minute cost to the automotive industry, according to SMMT calculations.

In a worst case scenario, this could cost £70 million a day. “Combine with WTO tariffs… this would deliver a knockout blow to the sector’s competitiveness.”

WTO passenger car tariffs alone would amount to £4.5 billion a year, “reducing consumer choice and increasing costs to UK car buyers,” said Hawes.

Earlier SMMT figures suggested WTO trade could add £1,500 to the price of the average British new car.

Export is vital for the UK automotive industry: 8 in 10 new cars built in Britain are exported. Most go to the EU. Add in imports, and 3.3 million new cars are traded between the UK and EU every year.

£20 billion Brexit boost?

New Aston Martin DBX at new St Athan factory in Wales

Britain is the world’s 10th largest exporter, and automotive is the largest single export industry. Take out automotive, and SMMT research suggests Britain would fall to 14th, behind Canada, Mexico, Russia and Belgium.

The sector, which is worth £101 billion, employs 168,000 people and contributes an annual £18.6 billion to the UK economy.

The SMMT has published a new study, the 2019 UK Automotive Trade Report, which also outlines the positives of a good Brexit trade deal.

The organisation has identified opportunities that, if backed by a positive automotive-focused trade strategy, could yield a £20 billion uplift in global automotive trade.

“This report shows that, if the right choices are made, a bright future is possible.”

The SMMT has outlined eight recommendations for the UK’s new PM, which include seeking new trade opportunities in global markets and strengthening government engagement with industry.

But free trade remains the top priority. “I will keep repeating it until I am blue in the face,” said Hawes. “We need a deal: no deal is not an option.”

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Richard Aucockhttps://www.motoringresearch.com/
Richard is director at Motoring Research. He has been with us since 2001, and has been a motoring journalist even longer. He won the IMCO Motoring Writer of the Future Award in 1996 and the acclaimed Sir William Lyons Award in 1998. Both awards are run by the Guild of Motoring Writers and Richard is currently chairman of the world's largest organisation for automotive media professionals. Richard is also a juror for World Car Awards and the UK juror for the AUTOBEST awards.

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