UK car industry pleads for zero-tariff deal after £735m spend on Brexit preparation

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2 min read
Suzuki cars are stored at Grimsby Docks, UK. Photo: Christopher Furlong/Getty Images
Suzuki cars are stored at Grimsby Docks, UK. Photo: Christopher Furlong/Getty Images

The UK auto industry has made a last-ditch appeal to the government to reach a zero-tariff trade deal with the EU as negotiations enter their final phase. The industry, battered by nearly a year of COVID-19 crisis, says its needs clarity, and fast.

Preparing for Brexit has already cost the UK car industry over £735m ($969m), according to the Society of Motor Manufacturers and Traders (SMMT). More than £235m of that was spent in 2020 alone.

“A disastrous ‘no deal’ outcome, or failure to achieve workable deal for auto, would mean £47bn hit to UK sector over next five years – on top of ongoing coronavirus crisis costs,” the SMMT says.

READ MORE: Boris Johnson signals momentum in Brexit talks

Carmakers have spent big on the new processes that they will need to adhere to from 1 January next year: 70% of automotive companies have already got their GB Economic Operators Registration and Identification numbers, while 60% have spent heavily on stockpiling.

More than half of the companies have invested in hiring customs agents to deal with the supply chains, which face enormous disruption as the UK finally leaves the bloc.

The car industry in Europe has been able to stay competitive in part due to complex just-in-time supply chains, with car parts for example arriving at plants exactly when they are needed, meaning factory lines run smoothly.

However, the SMMT notes that while these companies are doing their best to prepare for major upheaval, they are ultimately suffering from the lack of clarity about what the future trading relationship with the EU will look like — nine out of 10 firms said that the lack of clarity on the future trade relationship is hampering their efforts to prepare for the future.

“As the UK-EU FTA negotiations enter the endgame, now is the time for both sides to deliver on promises to safeguard the automotive industry,” said SMMT chief executive Mike Hawes in a statement.

Hawes added that the trade deal with the EU needs to be a zero-tariff and zero-quota. “A deal that failed to achieve this would be the equivalent to no deal at all, devastating jobs and slamming the brakes on the UK’s ambitions to be a world leading manufacturer and market for electrified mobility and battery technologies,” he said.

Prime minister Boris Johnson signalled progress in Brexit talks on Sunday (8 November), saying a trade deal with the EU was “there to be done.” He and European Commission president Ursula von der Leyen agreed on a phone call on Saturday (7 November) that they would “redouble efforts” to reach an agreement, with talks set to resume between EU chief negotiator Michel Barnier and his UK counterpart David Frost.

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