‘No deal’ Brexit would be catastrophic warns UK car industry

Three quarters of UK automotive businesses fear a ‘no-deal’ Brexit will threaten their future viability, according to a new survey by the sector's trade body the Society of Motor Manufacturers and Traders (SMMT).  

SMMT survey
Toyota's Burnaston factory

The survey – based on responses from 182 SMMT member companies - highlights the sector’s critical need for a Brexit withdrawal deal and transition to prevent the industry falling off the cliff-edge on March 29 when the UK leaves the EU.

74.1 per cent of companies with UK operations responding to the survey said that a ‘no-deal’ scenario would damage their business, with fewer than 9.0 per cent foreseeing any positive impact.

More than half said their operations have already suffered as a result of uncertainty about future trading arrangements. Almost a third said they had postponed or cancelled UK investment decisions because of Brexit, with one in five having already lost business as a direct consequence.

More than half of firms said contingency plans are now being executed, with over one in 10 relocating UK operations overseas and the same proportion already reducing employee headcount. Many have also made alterations to logistics and shipping routes, investment in warehousing and stock and adjustments to production schedules.

Respondents also outlined the further and long-term damage that a ‘no-deal’ Brexit would do to their businesses with 68.5 per cent saying that their profitability would be negatively affected; 53.9 per cent expressing concerns about their ability to secure new overseas business and a similar number worried about maintaining investment in their UK operations. A further half said a ‘no-deal’ scenario would undermine their ability to maintain their existing workforce.

Commenting on the findings Mike Hawes, SMMT chief executive, said, “Frictionless trade as part of the EU single market and customs union has driven the success of the UK automotive industry so the fact we are leaving is already painful, and already causing damage. Leaving without a deal would be catastrophic – plants will close; jobs will be lost. We need a deal now, and we need an ambitious deal for the future that guarantees frictionless trade with our most important market – nothing else will do, and we urge all parties to remember what’s at stake.”

Echoing this warning Tony Walker Managing Director of Toyota Motor Europe said: “No deal is not an option. In the short term, crashing out of the EU would have immediate and devastating impacts, with border chaos disrupting the Just in Time basis on which our business depends. Disruption could last for weeks – even months. It is unimaginable that we could implement full WTO import and export procedures overnight. For the longer term, a ‘no-deal’ Brexit would harm our competitiveness, undermine sales and cost jobs.”