Prospect of No Deal Brexit puts Car Industry on ‘Red Alert’

The potential that the UK might withdraw from the European Union without a deal on its terms of exit has put the British car industry on “red alert”.

The Society of Motor Manufacturers and Traders (SMMT) has said that a No Deal Brexit scenario would put two-thirds of the UK’s global car trade at risk.

According to the motor industry’s main trade body, leaving the EU without a deal would result in the “permanent devastation” of Britain’s car industry, with eight in 10 cars that are made in the UK currently being exported overseas.

The SMMT describes the automotive industry as an economic pillar for the UK and highlighted that roughly 186,000 people are employed directly within it across the country.

The trade group’s latest figures suggest that fears about Brexit have already had a damaging impact on performance among car makers and traders, with new investment levels having halved during 2018 compared with the year before.

Overall car production fell by 9.1 per cent during 2018, with the industry producing 1.52 million units across the year, which is a five-year low.

Declines in consumer and business confidence were also cited as factors contributing to a 16.3 per cent decline last year in the number of vehicles made in the UK for domestic consumption.

Notably, a majority (52.6 per cent) of the cars exported out of the UK for sale last year went to countries that form part of the EU.

“With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert,” said Mike Hawes, chief executive of SMMT, in a statement.

“Brexit uncertainty has already done enormous damage to output, investment and jobs,” he said.

“Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.”

Prior to 2017, the UK automotive industry had enjoyed seven consecutive years of growth and it is estimated currently to contribute around £20.2 billion to the Treasury on an annual basis.