Automotive industry calls for further Brexit delay

09 September 2019

Automotive industry calls for further Brexit delay

9 September 2019

The UK should delay Brexit beyond the end of October rather than leave the EU without a deal, according to the country's automotive industry body.

As the deadline of 31 October grows ever closer, there is still no clear answer on whether the UK can, or will, reach an exit deal with the European Union. The country's parliament has forced through a new law preventing a no-deal Brexit and opposition parties have scuppered Prime Minister Boris Johnson's calls for a general election.

However, the PM's preferred option is to leave on 31 October regardless of whether a deal is reached or not, despite the latter now meaning he would be breaking the law. With the original withdrawal agreement in tatters and the EU not currently willing to renegotiate, the UK remains in limbo – more than three years after the Brexit referendum.

Automotive worries

The UK car industry has been one of the most vocal over the avoidance of a no-deal Brexit, and now the head of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, is calling for a delay, rather than seeing the country crash out of the bloc without any form of trade agreement.

′Leaving without a deal would be the worst outcome,' Hawes told Reuters. ′If it takes an extra couple of months to get that deal, I think the industry would put up with that.'

Figures published by the SMMT in July showed investment in Britain's automotive sector fell by more than 70% in the first half of 2019, to £90 million (€98 million). Although a major investment by Jaguar Land Rover (JLR) will boost the year-end figure, this is a fraction of the £2.7 billion (€2.9 billion) the market was averaging before the referendum.

′Investment in the UK has effectively stopped,' said Hawes. ′It has because investors fear no-deal. That will make it very, very difficult to continue to have the certainty and confidence to invest in the UK.'

Preparation impossible

While the UK Government has been urging businesses to prepare for a no-deal Brexit, the automotive industry is struggling with this suggestion, especially due to measures some companies took before the previous deadline of 29 March.

Ministers have said they could help sectors hit by a disorderly exit and Brexiteers have long argued that Europe’s biggest economy, Germany, which exports hundreds of thousands of cars to Britain each year, would protect that trade.

While some preparations, such as new IT systems, can be carried over, others, including building additional component stocks, have to be redone. Some plans, such as temporarily shutting plants to cope with no-deal, cannot be repeated by everyone.

BMW, which moved its annual summertime shutdown at its Mini and Rolls-Royce factories to April to mitigate the effects of a disorderly exit, has said it cannot do the same again this time. Honda and JLR are also unlikely to shut down their plants again, having done so earlier than planned.

′Some may have a degree of flexibility; others won’t,' said Hawes.