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No Deal Brexit ‘Not an Option’ for Car Companies, Industry Body Insists

Written by: Keith Tully

Reviewed: Wednesday 19th September, 2018

A car deal showroom

A no deal Brexit “cannot be an option” for the UK as it exits the European Union, according to the Society of Motor Manufacturers and Traders (SMMT).

The organisation is fearful that a lack of a deal between the UK and the EU over the terms of Brexit could cause huge damage to the businesses of its members in Britain and to the entire European auto industry.

Its estimates are that the application of tariffs could lead to an extra £5 billion in costs to the UK and EU auto industries, which would potentially see the price of an average car increase by £2,700.

“Tariffs alone should be enough to focus minds on sealing a withdrawal agreement between the EU and UK but the potential impact of ‘no-deal’ means the stakes for the automotive sector are far higher,” said Mike Hawes, chief executive of the SMMT.

“Without a deal, there can be no transition period and the complex issues surrounding tariffs and trade, customs, regulation and access to talent will remain unresolved.” 

Roughly 186,000 people are employed directly within the UK’s automotive manufacturing industry and close to 856,000 are estimated to rely on the industry indirectly for their employment, according to the SMMT.

The industry is believed to contribute around £20 billion directly and more than £200 billion indirectly to the UK economy.

Across Europe, auto companies are also major contributors to economic activity, with 13.3 million people employed within the automotive sector across the EU.

“Our industry is deeply integrated across both sides of the Channel so we look to negotiators to recognise the needs of the whole European automotive industry and act swiftly to avoid disruption and damage to one of our most valuable shared economic assets,” added Mr Hawes in his recent statements.

Warnings about the potential impact of a No Deal Brexit were fired by the SMMT hours after BMW revealed that it intends to close its Mini car making plant in Oxford for a month immediately after the UK is scheduled to leave the EU from April 1st next year.

Car factories are often closed for several weeks at various times but BMW has brought forward its usual shutdown time as a precaution so its facility isn’t badly affected by supply problems in the wake of Brexit.

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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