No-deal Brexit could mean big price hikes for UK car buyers, warns industry body
Average price of a new model imported from the EU might rise by £1,500
A UK motorist buying a new car imported from the EU could find themselves having to pay £1,500 more in the event of a no-deal Brexit, according to automotive industry body the SMMT.
The UK trade organisation is today meeting EU representatives in Brussels to highlight the economic importance of the integrated European automotive industry and set out the repercussions for businesses, economies and jobs if a deal cannot be struck.
New analysis from the SMMT suggests that a no-deal decision and the resulting tariffs on light vehicles alone would add £5 billion to the collective EU-UK auto trade bill.
"Without a deal, there can be no transition period & the complex issues surrounding tariffs & trade, customs, regulation & access to talent will remain unresolved". SMMT CEO @MikeHawesSMMT on Brexit ahead of a meeting with EU representatives in Brussels https://t.co/Jwvu9eHOsj pic.twitter.com/fRlIAlREkw
— SMMT (@SMMT) September 19, 2018
If passed directly on to consumers, import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700, and that of light commercial vehicles by £2,000 – affecting demand, profitability and jobs.
Similarly, UK buyers of a car or van from the EU would be faced with £1,500 and £1,700 increases if manufacturers and their dealer networks were unable to absorb these additional costs.
The automotive sector is one of Europe’s most important industries, employing 13.3 million people and representing almost seven per cent of EU GDP.
It invests some £47 billion in innovation each year, making it the EU’s largest research and development player, and it produces roughly 17 million cars annually – nearly a quarter of global passenger car production.
The warning from the SMMT – the Society of Motor Manufacturers and Traders – comes as individual manufacturers themselves are becoming increasingly concerned about the spectre of a no-deal Brexit.
Time is running out & negotiators on both sides must prioritise the agreement of terms for a managed withdrawal and ‘status quo’ transition as soon as possible. ‘No-deal’ Brexit would undermine the industry’s ability to operate & cannot be an option. https://t.co/Jwvu9eHOsj pic.twitter.com/t3omIID2Nq
— SMMT (@SMMT) September 19, 2018
Honda – which has a huge factory in Wiltshire – this week warned that crashing out of the EU would cost the company ‘tens of millions of pounds’ – although it stressed it was fully behind its plant in Swindon where about 3,500 people are employed.
Meanwhile, Jaguar Land Rover has claimed that a ‘no-deal’ scenario could cost the manufacturer £1.2 billion annually – and has reduced production at its Castle Bromwich factory citing the ‘continuing headwinds’ affecting the industry.
Mike Hawes, SMMT chief executive, said: ‘‘Tariffs alone should be enough to focus minds on sealing a withdrawal agreement between the EU and UK but the potential impact of ‘no-deal’ means the stakes for the automotive sector are far higher.
‘‘Without a deal, there can be no transition period and the complex issues surrounding tariffs and trade, customs, regulation and access to talent will remain unresolved.
‘‘Our industry is deeply integrated across both sides of the Channel so we look to negotiators to recognise the needs of the whole European automotive industry and act swiftly to avoid disruption and damage to one of our most valuable shared economic assets.’