SMMT warns of no deal Brexit

‘No deal’ must be taken off the table or risk destroying the automotive industry and the hundreds of thousands of jobs it supports, the Society of Motor Manufacturers and Traders (SMMT) stated.

‘No deal’ with the EU would have an immediate and devastating impact on the industry, halting production, undermining competitiveness and causing irreversible and severe damage, SMMT believes.

While many companies have begun implementing contingency arrangements for a ‘no deal’ brexit, it is impossible for any individual company to fully mitigate the risks of this scenario. UK automotive’s complex and integrated supply chain works on a just-in-time basis, with the arrival of parts at plants timed to the minute, not the day or the week.

The border chaos caused by a ‘no deal’ scenario could render the process difficult with warehousing not a viable option given the scale of production, the complexity of the product, the space needed and the lack of immediate availability.

Automotive is a valuable UK sector, employing 856,000 people and delivering £20.2bn to the economy. Since 2010, car production alone has risen by a third, with 80% bound for export, the majority to the EU. 2.7 million new cars are traded between the UK and EU each year, while the UK exports some £3.4bn worth of components to help build vehicles across Europe.

Mike Hawes, SMMT chief executive, said, ‘As UK motor companies are being told to prepare for a ‘no deal’ brexit, the long-standing fears of the industry are becoming a reality. Brexit is already having an impact – in output, costs and jobs. But this does not compare with the catastrophic consequences of leaving the EU without a deal. The just-in-time nature of automotive means the impact of ‘no deal’ will be felt, not in months or days, but hours.’