UK automotive industry calls on government to rethink Brexit plans

Leading figures from across the UK car industry have told the government that if it doesn’t abandon its Brexit “red-lines” on customs union membership and the single market jobs will be lost and the sector will struggle to compete.

The warning, made at the annual summit of the industry’s trade body SMMT (Society of Motor Manufacturers and Traders) came as the latest figures show that despite a record year in 2017 the sector is now seeing job cuts and a slowdown in production output and investment. Indeed, in the first six months of 2018 just £347.3 million has been earmarked for new models, around half the sum announced in the same period last year.

SMMT’s chief executive Mike Hawes cautioned that the industry’s latest figures (it turned over £82 billion in 2017) are the result of investment decisions made long before the referendum and that the signs are now beginning to look more ominous.

“This is what we can achieve when we are unfettered but the industry has to make long-term decisions and the positive figures generated today are the result of investments made many years ago,” he said.

Leaving the single market and customs union will, he said, bring an end to the seamless movement of goods that the UK sector relies upon and he called on government to rethink its plans. “Government red lines go directly against the interests of industry,” said Hawes. “We must retain membership of the customs union and secure as many of the benefits of single market membership that we can. It makes no sense for our sector to have different regulation to the rest of Europe.”

Hawes added that the repeated claims that post-Brexit trade with non-EU partners will make up for any shortfall are naïve in such politically uncertain times. “We operate in an increasingly hostile protectionist global environment,” he said, “trade deals take time and there’s no deal that matches the scale and importance of our current deal with Europe.”

Trade deals take time and there’s no deal that matches the scale and importance of our current deal with Europe

His comments were echoed by BMW’s UK boss Dr Ian Robertson, who expressed frustration that dealing with Brexit is taking the UK’s eye off the ball at a critical time for the sector, when profound changes in materials, powertrain technology and even ownership present significant opportunities for growth.

“We are in the most competitive environment we’ve ever seen,” he said, “we can ill afford to have things which are thrust into that competitive equation. I’m very proud of the UK’s achievements and I would hate if it was knocked off course because of some change in the political environment.”

Contrary to reports in some newspapers, Robertson said that BMW is not currently considering moving production out of the UK (unlike Aerospace giant Airbus) but that the company is developing contingency plans for what it would do in the event of a hard Brexit, and how the future situation with Europe could impact its Just-In-Time manufacturing processes.

“What we don’t want to see is any delays or impediments that stop that,” said Robertson. “If we do then we will clearly have to make investments to overcome some of it, and that makes the industry less competitive.”

Robertson reiterated SMMT’s calls for government to ensure that the sector’s relationship with Europe remains as close as possible to its current arrangement. “This industry’s resurgence…is based on free flow of materials in and out and a borderless environment,” he said. “We shouldn’t give up on that, we don’t need to give up on that. We want to have what we already have. We recognise, understand and accept that Britain is leaving the EU but it doesn’t need to leave certain parts of the process of the EU: regulation being one and borders being another.”

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