Car prices will rocket and jobs will be lost if Brexit deal isn’t urgently agreed warns European car industry and SMMT

Time 1 year ago

Car prices will go up 10 per cent and thousands of jobs will be lost in the automotive industry unless the ‘catastrophic’ impact of a no-deal Brexit is avoided.

UK automotive leaders have joined forces with business groups across Europe to call for an urgent agreement on a free trade deal.

If Britain reverts to World Trade Organisation (WTO) rules from the beginning of next year production of three million cars and vans would be put at risk, the group has warned.


And the combined losses across the continent will top €110 billion by 2025 on top of the €100 billion in lost production caused by Covid-19 enforced shutdowns this year.

Mike Hawes, SMMT chief executive, said: ‘These figures paint a bleak picture of the devastation that would follow a no-deal Brexit.

‘The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk.

‘Our industries are deeply integrated so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity, and pull out every single stop to secure an ambitious free trade deal now, before it is too late.’

Without a deal in place by December 31, firms would be forced to trade under so-called WTO non-preferential rules.

This would include a 10 per cent tariff on cars and up to 22 per cent on vans and trucks, which would almost certainly need to be passed on to consumers, it was warned.

The figures are higher than the margins most car makers make on their vehicles.

Before the coronavirus crisis hit, EU and UK production of motor vehicles was running at 18.5m a year. Around 3.6m units have already been lost this year across the sector due to the pandemic.

For cars and vans alone, a reduction in demand resulting from a 10 per cent WTO tariff could wipe three million units from EU and UK factory output over the next five years, with losses worth €52.8bn to UK plants, it has been suggested.

The intervention from the European Automobile Manufacturers Association (ACEA), the European Association of Automotive Suppliers (CLEPA), along with 21 national associations, including the Society of Motor Manufacturers and Traders (SMMT) says an urgent deal is needed that delivers zero tariffs and avoids different regulations so there is no second economic hit to the sector.

Eric-Mark Huitema, ACEA director general, said the stakes were high, adding: ‘We absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector, already reeling from the Covid crisis, will be hit hard by a double whammy.’

It comes after last week’s stand-off between Brussels and Westminster which was sparked by UK legislation that could overturn the Withdrawal Agreement.

The EU responded by threatening legal action if the government’s proposals were not withdrawn.

This morning, Boris Johnson’s former attorney general, Geoffrey Cox, has said it would be ‘unconscionable’ to override the Brexit divorce deal, as the Tory rebellion against the controversial legislation grew.

The Tory MP said there is ‘no doubt’ the ‘unpalatable’ implications of the Withdrawal Agreement were known when the Prime Minister signed it, a time when Cox was the chief law officer.

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The Brexiteer warned he would not back the UK Internal Market Bill unless ministers dispel the impression they plan to ‘permanently and unilaterally’ rewrite an international agreement.

The QC, who was attorney general during the unlawful suspension of Parliament, said tariffs and customs procedures on certain goods entering Northern Ireland from Britain were part of the deal.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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