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Brexit one year on - what it means for Auto

23 June 2017

This week the Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes said: 'We accept that we are leaving the EU and we share the desire for that departure to be a success.

'But our biggest fear is that, in two years' time, we fall off a cliff edge - no deal, outside the single market and customs union and trading on inferior World Trade Organisation (WTO) terms."

It's clear that UK Automotive continues to grapple with the impact of what remains an uncertain Brexit. The long product lead-in times (often over five years from planning to production), the long product life (often five to 10 years) and highly intensive capital requirements all drive a need for medium-term certainty so that decisions made today will still make economic sense over the next 10 to 15 years.

Theresa May's government has engaged with the automotive industry to understand the sector's concerns and, notably, has been successful in persuading Nissan to build two new models at its plant in Sunderland. It is said that the decision will protect over 7,000 jobs and it was an early test of how the government would approach this sector. The letter of support written by Business Secretary, Greg Clark MP remains confidential although Mr Clark indicated that there had been no offer of financial compensation or state aid. "There's no chequebook. I don't have a chequebook", he said.

Many of the sector's worries remain at large and the EU has indicated that sector-specific trade deals will not be available. The UK's industry body (The Society of Motor Manufacturers and Traders - SMMT) has published a position paper on Brexit in which it calls on the government to prioritise the following:

  • Securing continued membership of the Single Market to ensure that there are no tariff or regulatory barriers to trade with the EU;
  • Securing continued membership of the Customs Union;
  • Guaranteeing unrestricted access to talent across Europe;
  • Creating regulatory certainty through harmonisation and future influence; and
  • Securing the UK's position in current EU trade deals and those under negotiation

While we think that continued Single Market membership is highly unlikely, we support the need to ensure that customs procedures do not create uncompetitive friction in the movement of goods, that talent continues to be readily available and that the regulatory environment remains harmonised.


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