No deal’ Brexit could cost car industry £55 billion in five years

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  • #130339 Reply
    Brydo
    Participant

    The impact of a ‘no deal’ Brexit deal on the UK automotive industry could cost more than £55 billion in production losses in the next five years, according to industry chiefs.

    The UK government is currently negotiating with the European Union over a new trade agreement for when the current transition period finishes at the end of this year, with the two sides yet to come to a deal that could allow for ‘tariff free’ movement of goods across the border. If the transition period ends without an agreement, World Trade Organisation (WTO) rules will come into force.

    According to analysis by the Society of Motor Manufacturers and Traders (SMMT), the imposition of tariffs could impact automotive manufacturers in the UK and EU by €110 billion (£96bn) – which follows a €100bn (£87bn) hit due to the impact of the coronavirus pandemic.

    The SMMT calculates that the automotive production losses that would likely occur if WTO rules are enforced could cost UK industry up to £55.4bn in the next five years. A ‘bare-bones’ trade agreement would have a £14.1bn impact.

    In a speech to industry executives and politicians as part of the SMMT 2020 Update Live event, George Gillespie, the SMMT president and Horiba Mira executive chairman, said: “We need a future trading relationship that works for automotive. We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost 28 times that to Covid. Let us not also be left counting the cost of tariffs, especially not by accident.

    “Industry can deliver the jobs growth we need and help rebuild a devastated economy, but government must work with us to create the environment for this success. That starts with a favourable Brexit deal and a bold strategy to help transform automotive production in the UK, attract new investment, upskill our workforce and build world-leading battery capability to future-proof our manufacturing. When Covid lifts, we need to be ready; ready to support government to engineer an economic – and green – recovery.”

    Following the UK government’s recent announcement that the sale of new petrol- and diesel-engined cars will be banned from 2030 onwards, SMMT chief executive Mike Hawes warned that a ‘no deal’ Brexit could have a major impact on the automotive sector’s ability to develop and manufacture zero-emission vehicles in the future.

    The SMMT estimates that trading under WTO rules could add an average of £2000 to the cost of British-built electric cars and would add £2800 to the price of EU-built cars for UK consumers.

    Calling the government’s 2030 target “an immense challenge”, Hawes said: “We are already on the way, transforming an industry built on the combustion engine to one built on electrification. But to complete the job in under a decade is no easy task. And with showrooms closed, choking factories of orders, the ability of the sector to invest further is severely constrained.

    “Automotive is nothing if not determined, adaptable and resilient yet, as the clock ticks ever closer to midnight on Brexit negotiations, the competitiveness and employment we need to get back to growth – green growth – hangs in the balance.”

    In response Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, said: “I understand just how important it is to have to clairity on our trading position at the end of the transition period. We have been working tremendously hard to get a deal with the EU and we are committed to working hard to getting a deal during this intensive period of talks.

    The only person who got all his work done by Friday was Robinson Crusoe.
    Anything i post over three lines long please assume it is an article lol.

Viewing 16 replies - 1 through 16 (of 16 total)
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  • #130343 Reply
    Wigwam
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    And presumably the same applies to German, French, Spanish etc manufacturing.

    So the motor industry will make less cars. I realise this has an effect on employment and tax take, but otherwise so what?

    #130344 Reply
    alan1302

    So what?  100,000’s of people in the UK work for or in the supply chain of the large car companies like Toyota/Nissan/Jaguar Land Rover.  Making it difficult and more expensive to take cars into the EU makes those companies think about if they should continue manufacturing them here putting all those jobs at risk.  Surely you can see that as a big blow to the UK?  It won’t affect Germany/France/Spain as much as they only send some of their cars here the rest go round the EU as normal.  It will affect every UK car being exported out.

    #130350 Reply
    Wigwam
    Participant

    Assuming no deal and WTO, cars imported from EU countries will face the same tariffs as cars made in the rest of the world. British made cars will not giving them a cost advantage.  Is it not possible that European manufacturers will look to set up production in the UK?  Capitalism chases profits.

    #130362 Reply
    gothitjulie
    Participant

    This is all going to depend on who we have FTAs with, so a car being imported from say Korea comes under an FTA where one coming from say the Hyundai factory in the EU would not & WTA tariff would be added.

    Who buys all those Jaguar Land Rover cars? well, the Americans, so WTA with the EU would make no difference anyway.

    Nissan & Toyota are another matter, & there’s cars going both ways (to & from the EU), so that just gets complicated.

    Cherry picking of the statistics isn’t useful by many of the authors of these articles & studies.

    #130369 Reply
    Wigwam
    Participant

    I would always take anything by the SMMT and the CBI with a large pinch of salt..

    #130386 Reply
    alan1302
    Participant

    Assuming no deal and WTO, cars imported from EU countries will face the same tariffs as cars made in the rest of the world. British made cars will not giving them a cost advantage. Is it not possible that European manufacturers will look to set up production in the UK? Capitalism chases profits.

    No, it makes no economic sense to makes cars in the UK just for the UK market – car makers require volume and so need to be able to export out of the UK and anything that makes that harder and more expensive is bad for the UK based makers.

    #130387 Reply
    alan1302
    Participant

    TWho buys all those Jaguar Land Rover cars? well, the Americans, so WTA with the EU would make no difference anyway. Nissan & Toyota are another matter, & there’s cars going both ways (to & from the EU), so that just gets complicated. Cherry picking of the statistics isn’t useful by many of the authors of these articles & studies.

    JLR sold 146,000 cars in Europe last year and 125,000 cars in the US…so the US certainly does not buy all of them or even the majority of them.

    Nissan is most at risk at leaving as they have an alliance with Renault so can easily close the Sunderland plant and move production into the EU.  Am sure BMW could with Mini as well

    #130389 Reply
    Wigwam
    Participant

    Alan1302, I agree it would make no sense to make cars in the UK just for the UK market.  There’s a world outside the EU, you know…

    #130390 Reply
    Brydo

    The thing is if you are on WTO rules with the Eu you are on WTO rules with every other country in the world except those you have an agreement with. Not sure how many we have agreements with just now and before the end of December

    #130427 Reply
    alan1302
    Participant

    Alan1302, I agree it would make no sense to make cars in the UK just for the UK market. There’s a world outside the EU, you know…

    There is a world outside of the EU – but that is the biggest market for cars near the UK.

    Nissan – make cars in the UK for the EU market – they have factories elsewhere to send cars to places outside of the EU.

    Toyota – same as Nissan.

    BMW – they have factories in the EU already so may want to use those more.

    JLR – they have overseas factories in China they could use if they get better import taxes.

    Vauxhall – they make the Opel Astra for the EU market – the car could easily be made elsewhere as they are owned by PSA who have a lot of car factories to use.

    So if the UK gets a poor Brexit deal why would the companies want to stay?

    #130438 Reply
    Wigwam
    Participant

    If the UK agrees a deal there will be no duty on cars between us and the EU.  If it doesn’t, then the motor industry will do what all global companies do, which is to sell its goods wherever there is demand and make its profits where it can.

    #130441 Reply
    alan1302
    Participant

    f it doesn’t, then the motor industry will do what all global companies do, which is to sell its goods wherever there is demand and make its profits where it can.

    Which is most likely to mean they close the UK factories losing potentially 1,000’s of skilled jobs which will be hard to replace.

    #130443 Reply
    Wigwam
    Participant

    That’ll be why JLR have just announced a new apprenticeship program to put 300 people through university.

    #130444 Reply
    alan1302
    Participant

    That’ll be why JLR have just announced a new apprenticeship program to put 300 people through university.

    Companies continue to run as normal until things change – if the UK does not get a deal then many companies will change what they are doing now.  If they had said they were building a new factory then that would be more interesting as that shows a level of commitment to the UK.

    #130448 Reply
    Wigwam
    Participant

    Nissan announced last week the new Qashqai is to build in Sunderland..

    Coming back to the original post, the SMMT is scaremongering. It’s what they do.

     

    #130452 Reply
    alan1302
    Participant

    Nissan announced last week the new Qashqai is to build in Sunderland.. Coming back to the original post, the SMMT is scaremongering. It’s what they do.

    Which is like I said – they continue on as usual – but if the UK does not get itself a good deal they will pack up the factory and move it to the EU.  The only originally came to the UK as they got a good deal with the UK government of the time so am sure they can leave as easily if things change for them.

    What part of the report is scaremongering?

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