SMMT urges new Prime Minister to avoid hard Brexit

29 July 2019

With Boris Johnson becoming the UK’s new Prime Minister, the Society of Motor Manufacturers and Traders (SMMT) has implored him to take a ′no-deal’ Brexit off the table for the good of the automotive industry.

In a letter sent to 10 Downing Street, SMMT chief executive Mike Hawes highlights the ′exciting times ahead’ for the country, with technological advances offering potential investment opportunities for the UK. However, he warns that such potential would be negated with a no-deal situation.

′There will be more change in automotive in the next ten years than there has been in the last fifty,’ Hawes writes in the letter, seen by Autovista Group. ′The UK sector remains strong, with high levels of productivity, a skilled and flexible workforce, and first-rate research and engineering facilities, so we are well placed to take advantage of the opportunities that will emerge. Automotive is, however, a highly competitive sector internationally, with fine margins. We cannot afford to be complacent, and we need the right policy, business and trading environment if we are to thrive.’

Industry benefits

The SMMT believes that the UK Government must continue to work with the sector to focus on actions that will deliver the greatest benefits, not just to UK automotive, but also to the country as a whole. This means supporting the transition to zero-emission vehicles by investing in charging infrastructure, increasing consumer incentives and securing a gigafactory in the UK to help retain a globally advanced supply chain.

′We must make the UK the most attractive destination for investors, creating an internationally competitive business environment and developing skills in new digital technologies,’ Hawes writes.

′Automotive is a key driver of productivity and innovation. It contributes £18.6 billion [€20.6 billion] to the UK, employs hundreds of thousands and makes the most significant contribution to UK trade of any manufacturing sector, helping balance the economy right across the country. In short when automotive succeeds, so does the UK.’

Brexit concerns

However, Hawes highlights the sector cannot enjoy this prosperity if it does not continue to enjoy, without interruption, preferential trade with critical markets around the world, including the EU.

′We cannot continue to deliver these benefits, or take advantage of new opportunities if the UK leaves the EU without a deal,’ he writes. ′A no-deal Brexit presents an existential threat to our industry. We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production, as well as further undermining international investors’ confidence in the UK. We need a deal with the EU that secures frictionless and tariff-free trade. No-deal Brexit is simply not an option.’

In the last year, both Honda and Ford have announced plant closures in the UK. While both deny Brexit is the full reason for these moves, it is unlikely the situation did not factor somewhere in the decision. BMW has moved some engine production out of the country, while PSA Group has warned that an ′unfavourable scenario’ would lead it to consider its manufacturing facility at Ellesmere Port.

There are also concerns over Nissan’s plant in Sunderland, with the Japanese company announcing that it will cut 12,500 jobs globally and review its production facilities to cut costs. The company has already pulled its planned X-Trail production from the UK plant, preferring to build it in Japan, which has a free-trade deal with the EU.