Potential Cost of £40bn by 2024 for UK Car Industry if no-deal Brexit

The figures calculated revealed that with a no-deal Brexit 1.5m fewer cars would be produced by British factories in the next five years.

The Society of Motor Manufacturers and Traders reported that new independent research indicated that tariffs could add £3.2bn a year to costs in Britain, equivalent to 90% of the industry’s research and development budget.

This with a combination of reduced demands and relocation of production would result in UK factory output falling from 1.3m to 1m vehicles per year, this is a far-off figure from the original prediction of 2m cars being produced by 2020.

Not only will the industry suffer from costs, but thousands of jobs in the sector would be at risk. The sector currently employs 168,000 people in Britain.

Due to the high risk the trade body has called for “an ambitious deal that eliminates tariffs, delivers frictionless trade, maintains regulatory alignment and secures access to talent from across the globe”.

Society of Motor Manufacturers and Traders Mike Hawes comments:

“UK automotive’s needs are clear: frictionless trade free of tariffs, with regulatory alignment and continued access to talent. Detailed trade negotiations have yet to begin. They will be complex and they will take time. But a close trading relationship is essential to unlocking investment. The next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain.”

The industry continues to voice concerns and campaigns against Brexit. Raising issues that delays at border and tariffs would increase production costs significantly.

Hawes went on to comment:

“Rather than producing 2m cars a year by 2020, a no-deal worst-case scenario could see us making just a million. That’s a loss to the economy of over £40bn. Cherished production lines mothballed, workforces cut, a haemorrhaging of skills, of investment. What a travesty.”

Jaguar Land Rover, Toyota, and BMW manufacture already shut down lines last month anticipating Britain’s departure from the EU. As this did not go ahead in it expected another shutdown may occur on the new date in January depending on the outcome of the election.

Read also about the side effects of Brexit on the real estate market and the consequences for air travel.

Image Source by Financial Times