Economy

No deal Brexit is not an option, Britain's vehicle industry warns

No deal Brexit is not an option, Britain's vehicle industry warns

Mike Hawes, SMMT Chief Executive, said, "June's results demonstrate the risks of judging automotive performance one month in isolation, with numerous and varied factors creating a flawless storm for home market output".

While production of vehicles for export grew 6.0% in the month, this could not offset a 47.2% decline in production for the United Kingdom market, the group said, adding that model cycles, operational changes and preparation for a new range of next-generation vehicle technology ahead of new Worldwide Harmonized Light Vehicle Test Procedure emissions standards, all played a part in the month's anomalous figures.

"No one would profess to being Brexit-ready because there are too many variables in there", he said.

Economists polled by Reuters have said a no-deal Brexit is the third most-likely outcome, behind a new free trade deal between Britain and the EU and continued membership by Britain of the European Economic Area's single market.

A total of 834,402 vehicles rolled off United Kingdom production lines from January to June, a -3.3% decrease on the same period in 2017 as the domestic market was affected by a range of factors, including tax changes and uncertainty over future policies on diesel.

"But if that deal is not on the table, then we need to know pretty swiftly what deal we are looking at".

Although UK Automotive now exports more than eight out of every 10 cars it builds to more than 160 countries worldwide, it is also a major importer. Much of the industry is owned by foreign companies.

The SMMT reiterated calls for Brexit negotiators on both sides to back free and frictionless trade to safeguard one of the United Kingdom and EU's most valuable assets.

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"What we would say is that any increase in tariffs would be significant and would be damaging both to the USA and in Europe, and I include (Britain) in Europe when it comes to exports", Hawes said.

"The automotive industry has made it clear that for its long term health it wants the United Kingdom to commit to continued membership of the customs union and access to the single market".

More than 87 per cent of cars registered by British buyers over the first six months of the year came from overseas plants, with over two thirds (69.1 per cent) of those from European Union countries.

"The UK government's latest Brexit proposals are a step in the right direction to safeguard future growth, jobs and consumer choice - not just in Britain but right across Europe". In the United Kingdom, nearly 20,000 British buyers invested in cars built in U.S factories in the first six months of the year, representing 1.5 percent of the market.

Having dipped in May, auto export orders rose by a healthy 6 per cent in June, according to the Society of Motor Manufacturers and Traders.

"Exports were strong but sales in the United Kingdom fell as continued pressure on consumer spending, together with only lukewarm words of support from government for diesel, weighed heavy on drivers' appetites to invest in traditional combustion engines".

He said any disruption to this due to Brexit "risks undermining" this.


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