U.K. Auto Industry Wants to Avoid Brexit Guesswork

The U.K. automotive industry warns the government not to undermine its hard-won competitiveness by making slow progress on Brexit.

Society of Motor Manufacturers and Traders President Tony Walker says there is no substitute for free and frictionless trade and calls for quicker progress on establishing a transition period following the U.K.’s departure from the European Union.

“We need to see concrete progress – and quickly,” Walker tells more than 1,100 industry leaders, government representatives and other stakeholders at the SMMT’s 101st annual dinner.

He says a period of transition is needed to avoid a post-Brexit cliff edge, and this transition “should be on the current terms and, crucially, not time-limited” to give industry time to adjust and secure long-term investment decisions.

“We will never stop striving to be competitive,” Walker says. “But we ask government to help provide the conditions in which we can compete. As with every other industry, we need certainty now.”

The transformation over the past 25 years has resulted in an industry that is strong, resilient and innovative – not fearful of the future but keen to grasp the opportunities it is creating, he says.

“I am very proud that today our U.K. automotive industry competes globally on quality, productivity, flexibility and cost,” Walker says. “We have delivered an export-led renaissance.

“But we are not complacent. Competitiveness comes hard-won. It can be easily lost. A hard Brexit would undermine all that we have collectively achieved. It is a real threat – a hurdle we cannot ignore.”

Walker says a lack of progress over Brexit already is affecting the automotive sector.

“Consumer confidence has fallen, leading to a downturn in sales,” he says. “Uncertainty about Brexit – and market confusion over diesel – are taking their toll.”

Walker spoke as SMMT released figures illustrating the high stakes of a no-deal Brexit for the automotive sector.

The risk comes not just from costly World Trade Organization tariffs – which would add at least £4.5 billion ($6.1 billion) to the industry’s annual overheads – but also from the imposition of customs checks, red tape and fees on goods that currently move friction-free across borders.

Every day, more than 1,100 trucks headed to car plants cross from the continent – the vast majority without being checked at customs – to deliver £34.8 million ($47 million) worth of components. Every day, these components help build 6,626 cars and 9,791 engines – the bulk of them then shipped back to EU customers and assembly plants.

Walker says despite the introduction of hybrids, plug-in hybrids, battery-electric vehicles and hydrogen fuel-cell cars the internal-combustion engine is not dead, but is the path to a cleaner and greener future.

“Banning diesel and petrol (gasoline) cars might be a sound bite that works, but it’s not a policy that works,” he says. “If you ban them, you disrupt the new-car market and you hamper investment in the electric, emission-free vehicles of tomorrow. You set the future back.

“The automotive sector has been keen to highlight that the latest Euro 6 vehicles bring significant benefits in terms of low emissions and meeting our climate change targets, and these newer, cleaner vehicles should not be unfairly penalized in government plans.”