UK Car Industry Sounds Alarm on Dire Consequences of No-Deal Brexit
UK automotive firms are urging politicians to avoid a no-deal Brexit, as recent data from the Society of Motor Manufacturers & Traders (SMMT) shows that British car production dipped to a five-year low in 2018.
In 2018, over 1.5 million new cars were made in the UK, a drop of 9.1%, marking the second straight year of decline amid various challenges. Alongside these figures, SMMT revealed a sharp decrease in new investments in the sector, down nearly half (46.5%) from 2017 to £588.6 million. This happens as concerns grow about the UK’s future trade deals with the EU and other major markets post-Brexit.
The production for the UK market saw a significant fall of 16.3% in 2018, affected by regulatory changes and uncertainty surrounding future diesel policies and taxes. Consumer and business confidence also took a hit. Export markets weren’t spared either, with overseas output declining by 7.3% due to economic slowdowns in Europe and Asia.
Car exports to China dropped by 24.5%, and EU demand decreased by 9.6%, which wasn’t as severe as the 20.9% fall in registrations in the UK. Nevertheless, the EU remains the biggest market for UK car exports, accounting for 52.6% with 650,628 cars.
On a positive note, the availability of new premium models made in the UK spurred a 5.3% growth in exports to the USA, reinforcing its position as the UK’s second-largest customer after the EU. Exports to Japan and South Korea also grew, by 26.0% and 23.5% respectively. These countries, alongside others like Canada and Turkey, are currently benefiting from EU trade agreements that the UK is part of. Together, they represent 15.7% of the UK’s car exports.
However, there is not much time left to ensure these trade agreements remain in place post-Brexit. A no-deal scenario could jeopardize more than two-thirds of the UK’s global automotive trade.
“With less than 60 days to Brexit, and the real possibility of a no-deal scenario, the UK car industry is on high alert,” said Mike Hawes, SMMT chief executive. “Brexit uncertainty has already severely impacted output, investment, and jobs. The scale of damage from losing our seamless trade links overnight would be unprecedented. Given global challenges, Brexit poses a significant and immediate threat, putting thousands of jobs at risk. We urge all parties to prevent a no-deal outcome.”
The downturn in UK car manufacturing in 2017 and 2018 comes after seven years of notable growth post-recession, with output up by over 70%. Today, the UK automotive sector is highly respected worldwide, being the country’s largest goods exporter and a crucial economic pillar, employing 186,000 people and contributing £20.2 billion annually to the Treasury.
This success is largely due to the UK’s competitive edge, built on political and economic stability, investment, a skilled workforce, and favorable trading conditions with major markets. A no-deal Brexit presents the most considerable threat to the industry’s competitiveness in a generation, according to the SMMT.
