Brexit threatens UK auto industry competitiveness warns SMMT boss

The president of the Society of Motor Manufacturers and Traders (SMMT) has warned that lack of progress on Brexit – and fears over the implications of leaving the single market – are undermining the competitiveness of the UK’s automotive industry.

WTO Tariffs would add at least £4.5bn to the sector’s annual overheads. Pic: Toyota UK

Speaking at the trade association’s annual dinner in London, Tony Walker, – a 40 year veteran of the automotive industry, and deputy managing director of Toyota Motor Manufacturing UK – called for quicker progress on agreeing a transition period following Brexit and argued that in order to give industry time to adjust and secure long-term investment decisions, such a period should be on the current terms and not time-limited in order to give industry.

Praising the sector for its transformation over the past 25 years, Walker warned that this progress is now under threat.

“I am very proud that today our UK automotive industry competes globally on quality, productivity, flexibility and cost,” he said. “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. After all the difficulties we have overcome, all the changes we have made and the innovations we have brought, we do not need trade barriers to be our next challenge.”

He added that the lack of progress over Brexit was already having an impact on the sector. “We have huge challenges. Consumer confidence has fallen leading to a downturn in sales. Uncertainty about Brexit – and market confusion over diesel – are taking their toll.”

Newly released figures from the SMMT illustrate the high stakes of a no deal Brexit for the sector. The risk comes not just from costly WTO tariffs – which would add at least £4.5bn 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.

According to SMMT, every day, over 1,100 trucks for UK car plants cross into the UK from the continent – the vast majority without being checked at customs – to deliver some £35m worth of components to UK vehicle and engine plants. And every day, these components help build 6,600 cars and 9,800 engines – the bulk of which are then shipped back to EU customers and assembly plants.