The UK automotive industry has called on government to seek an interim arrangement with the EU that would maintain membership of the single market and customs union until a final agreement on a new relationship with the EU is negotiated and implemented.
The sector accepts that the UK will leave the EU and fully supports a bespoke and comprehensive agreement on a new relationship with the EU.
However, a final agreement would be hugely complex and it does not believe such a comprehensive agreement can be reached by March 2019 – just over 20 months’ time.
Without agreed interim arrangements, businesses would be faced with the ‘cliff edge’ and forced to trade under the World Trade Organisation rules – the worst foreseeable outcome for the sector, its employees and the British economy.
Speaking today as the sector announced its annual performance figures, SMMT said it was time to be pragmatic about what can be achieved in the time available and what the consequences would be if the UK left without a deal.
The UK and EU automotive sectors are highly integrated and any new relationship will need to address tariff and non-tariff barriers, regulatory and labour issues, all of which will take time to negotiate.
The EU is by far the UK’s biggest automotive export market, taking over half our finished vehicles, four times as many as our next biggest market. The sector already exports to over 160 different global markets and has a consistent approach to free trade.
|It needs that trade to be tariff-free, as frictionless as possible to support the ‘just in time’ manufacturing process and with consistent regulation.
It comes as latest data shows UK automotive manufacturers turned over £77.5 Billion last year, the highest recorded.
UK car and commercial vehicle production and new vehicle registration volumes grew to record levels in 2016, up 8.9% and 0.2% respectively.
Meanwhile, employment in manufacturing remained stable at 169,000 jobs, resulting in productivity reaching a record high of 11.8 vehicles produced for each person employed in the industry.
The average manufacturing worker generated more than £130,000 for the British economy, up 9.8% on 2015.
The number of livelihoods dependent on the sector as a whole stood at 814,000 across manufacturing, retail, distribution and repair services.
The record turnover by UK motor manufacturing represents a 9.0% increase on 2015, with the additional value added to the UK economy rising 7.3% to £21.5 billion. The industry also upped its investment in innovation, with R&D spend reaching £2.75 billion last year, up from £2.5 billion in 2015.
|The United Kingdom (UK) automotive aftermarket will grow.
A rise in innovative business models and services such as e-retailing, telematics and connected car systems, personal contract purchase (PCP) financing, service aggregators, and e-stores are factors propelling demand and creating unique value for customers in a price sensitive market.
To capitalise on the growing ageing vehicle market, service chains should focus on highly replaceable parts associated with top brands while independent garages should develop a better understanding of servicing top brands.
“In a fiercely competitive evolving ecosystem, independent aftermarket (IAM) players and franchises must harness available opportunities such as developing mutually beneficial partnerships and tie ups with PCP agencies, tyre companies, telematics and connected car manufacturers to offer better discounts, customer value, and ensure availability of parts on time,” said Frost & Sullivan Mobility Program Manager Anuj Monga.