SMMT survey reveals £735m cost of Brexit

A new survey from the Society of Motor Manufacturers and Traders (SMMT) has revealed that the cost to the automotive sector of preparing for Brexit has surpassed £735m, with over £245m spent in 2020 alone.

SMMT
(Image: Nissan)

Most companies across the industry (67 per cent) said they were doing everything in their control to prepare for new processes that will come into play on 1 January, with 70 per cent securing GB Economic Operators Registration and Identification (EORI) numbers, 60 per cent spending significantly on stockpiling, and 52 per cent employing customs agents as companies try to prepare for disruption to supply chains. 

Significant gaps in the industry’s ability to plan still exist, however, with almost nine in ten firms (86 per cent) saying that the lack of clarity on the nature of the UK-EU’s future relationship has hampered their efforts.

Clarity on the operation of new key customs systems such as the Goods Vehicle Movement Service (GVMS) and the Permission to Progress (P2P) process has been described by SMMT as ‘vital’ to the industry. In addition, there is uncertainty as to how companies will prove origin of products even if the UK and the EU do conclude a Free Trade Agreement (FTA), meaning firms will not be able to benefit from preferential trading terms.

SMMT warned that the income of a no-deal outcome would prove ‘devastating’ for the industry, with £47bn in lost trade predicted over the next five years on top of the impact of the coronavirus crisis – which is already said to have cost the UK sector around £27.5bn in lost car production and sales. 

Car production slump prompts plea for Brexit deal

Mike Hawes, SMMT chief executive, explained that while securing a deal is critical it cannot just be ‘any deal’.

“To work for UK Automotive it must deliver for UK products and that means securing the right terms and conditions that allow our exports – now and in the future – to be zero tariff and zero quota trade,” he said in a statement. “A deal that failed to achieve this would be equivalent to no deal at all, devastating jobs and slamming the breaks on the UK’s ambitions to be a world leading manufacturer and market for electrified mobility and battery technologies.”

SMMT has issued a plea as negotiations enter endgame this week, with ten key asks they have described as ‘urgent’

  • A temporary grace period for exporters of at least one year to obtain supplier declarations
  • Clarity on the format of the upcoming origin declarations
  • Certainty on preferential origin formalities for export to the UK’s other FTA trading partners
  • Guidance on valuation and origin of used products imported into the UK for remanufacturing purposes
  • Details on the P2P process and GVMS to mitigate risks to Just-in-Time manufacturing
  • Draft legisaltion on how the UK government will handle returnables/stillages/empty packaging that was committed to in April 2020
  • Support in connecting with third-party intermediaries 
  • Extend access to the £84m customs funding for all traders to boost their customs capacity 
  • Publish a full list of ports and which operating model they will use as a matter of urgency
  • Significantly more operational level information on the workings of the Northern Ireland Protocol