Car makers sob out for interim Brexit deal to stop industry falling off a cliff

B ritain’s car industry has called on the Government to accept that transitional deal to leave the EU is necessary to stop the automotive sector falling off a “cliff edge”.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, used his keynote address at the trade body’s annual summit to warn of the dangers that Brexit poses to the automotive industry – one of the country’s largest – as well as voicing businesses’ frustration.

“We have asked for clarity and certainty,” he said. “The general election has not brought that clarity. It has added confusion.

“It is time to stop playing with words. ‘Soft’ or ‘hard’ Brexit and now ‘open’ mean nothing. It’s time to be fiercely fair – our sector needs a comprehensive and bespoke trade agreement.”

M r Hawes’ comments came as the SMMT’s annual sustainability report exposed that the industry had grown for the seventh year running, with its annual turnover now standing at £77.5bn, a rise of 9pc.

Employment numbers remained stable, with almost 170,000 people employed in manufacturing vehicles and a total of 814,000 jobs supported by the sector.

Car production rose 8.9pc, with each worker generating an average of £130,000. Productivity rose to a record high, with 11.8 vehicles produced for each person employed in the industry.

T he SMMT has previously warned that if Britain crashes out of the EU without a trade deal, tariffs could mean prices of imported cars leaping £1,500 each.

With 80pc of the 1.7m cars built in Britain annually being exported, customs and foreign sales costs could land the industry with a further £2.7bn a year bill.

I n total, without a trade deal for the sector, Britain’s automotive industry could take a £4.5bn hit.

The SMMT said the two-year deadline set by Article fifty “cannot be delivered”, adding it is more likely to take five years.

“This uncertainty cannot be permitted to haul on – and haul British industry down with it,” Mr Hawes said. “Nor will we be pleased with vague talk of a ‘transition’ or ‘implementation’ period.

“Instead, we need a clear interim arrangement – an arrangement enabling ‘business as usual’ from day one.”

H e called for the Government to seek an interim deal that sees the UK remaining in the customs union and single market for the duration of the negotiations, and for as long as it takes to lodge a fresh deal with the EU.

Without this, the £77.5bn-a-year UK car industry, which directly employs 170,000 people and supports a further 800,000 positions, faces a “cliff edge” that would put it “in peril, hurting it permanently, disrupting supply chains and jeopardising competitiveness”.

M r Hawes spoke as an Automotive Industry Council report exposed that the level of UK-produced components in cars coming off British production lines had risen to 44pc from from 36pc a year ago, with manufacturers pushing for this level to increase as Britain goes for the EU exit door. A ratio of around 50pc UK-made parts is thought to be the minimum necessary for British goods to avoid tariffs under a free trade system.

‘Death by a thousand cuts’

Asked to define what the industry meant by fearing “permanent damage”, Mr Hawes said: “The danger is death by a thousand cuts. If there is long-term uncertainty about Brexit, it could delay investment decisions, making Britain less competitive and unlikely to attract further investment.”

The industry chief said failure to hammer out a deal would not mean plants shutting down overnight, but rather a slow spiral downwards for the UK car sector.

The industry has had informal input with the Government over its negotiations with the EU, but Mr Hawes said he would like to see this interaction increase as talks about Brexit take form and specific issues affect the industry.