No-deal Brexit ‘not an option’ for UK car manufacturers, industry says

REUTERS/Phil Noble

• A no-deal Brexit is “not an option” for UK car
  manufacturers, the head of Britain’s auto manufacturing group
  said on Tuesday.
• “No deal… is just not an option. It would be
  seriously damaging to the industry not just in the UK but in
  Europe as well,” Mike Hawes, chief executive of the Society of
  Motor Manufacturers and Traders (SMMT) said.
• The warning was made more stark as new figures show
  that nine out of ten cars built in the UK in the last month
  were due for export rather then domestic sales, as demand in
  the domestic market collapsed by 47%,
  Reuters reported.
• “A no-deal scenario is feared by volume UK auto
  manufacturers which could affect the smooth running of plants
  and squeeze the already tight cost margins of British car
  companies selling to Europe,” David Leggett, a director and car
  industry analyst at Just Auto, told Business Insider.

A no-deal Brexit is “not an option” for the UK car industry,
considering the disruption and cost carmakers would suffer, the
head of the country’s auto manufacturing group said on Tuesday.

Carmakers are “increasingly concerned” about the lack of clarity
around the manner of Britain’s departure from the European Union,
Mike Hawes, chief executive of the Society of Motor Manufacturers
and Traders (SMMT) said,
Reuters reported.

The warning was made more explicit as fears over disruption to
cross-border trade were highlighted by new figures showing that
nine out of ten cars built in the UK last month were for the
foreign export market.

Prime Minister Theresa May, who has eight months until the split
with the EU is due to take place, is yet to produce a proposal
that can sustain economic links and satisfy both her party and
negotiators in Brussels.

This has left open the possibility that Britain could have
economic ties with the EU severed, leaving the UK dependent on
World Trade Organisation rules meaning British car exports to the
EU would face 10% tariffs.

“No deal… is just not an option. It would be seriously damaging
to the industry not just in the UK but in Europe as well,” Hawes

told Reuters and other reporters as he presented SMMT’s
mid-year update on British car production.

The car industry employs over 850, 000 people, both directly and
indirectly in Britain and Hawes said car manufacturers were
getting as “ready as possible” for any disruption from a no-deal
Brexit.

In the first six months of 2018 British car production fell by
3.3% due to a sharp decline in domestic demand outweighing a
boost in exports. In June production fell by 5.5% compared with
June in 2017, despite a 6% rise in export output. Behind the
shift is a domestic market collapse of 47%.

“This reflects a number of developments, including model cycles
and pressures on consumer spending in Britain,” David Leggett, a
director and car industry analyst at Just Auto, told Business
Insider.

On the cost to car manufacturers he added that a no-deal
scenario is feared by volume UK auto manufacturers which could
affect the smooth running of plants and squeeze the already tight
cost margins of British car companies selling to Europe.

“The auto industry in Britain is highly locked in to pan-European
supply chains. Besides the impact of new trade tariffs of as much
as 10%… the industry in Britain could face expensive hold-ups
at borders for additional checks that would disrupt production
schedules set-up for just-in-time delivery processes,” Leggett
said.

Despite the concerns over Brexit, Hawes reassured reporters,
“Looking at the long-term picture, the sector is performing as
expected in the context of market conditions at home and abroad.”