The head of the automotive trade body in UK has warned that the car industry there is not ready for taking on the Brexit challenges. This amidst renewed concerns over cross border trading with the Europe because nine out of 10 cars that were manufactured in the country last month were exported.
In June, there was a plunge of 47 per cent in the output of vehicles for the UK market an din comparison there was a 6 per cent increase in exports, said the Society of Motor Manufacturers and Traders (SMMT) even as there is a “perfect storm” of factors.
While reminding that the monthly drop in sale in the UK were a “reminder of the exports-led nature” of the UK car industry, Mike Hawes, the SMMT chief executive, sought to play down the domestic figure.
According to Hawes, because 53% of UK cars are exported, therefore there was a need for striking a deal with the EU as shown by the figures. He also warned that the industry has been struggling to prepare itself for Brexit because of a lack of clarity on the issue.
“No one would profess to being Brexit-ready because there are too many variables in there,” he said. “We need a deal. If we have no deal, there is no transition, there is no implementation period, that would kick in less than eight months away. You can operate on WTO [World Trade Organization] trade rules but it would be at a significant extra cost and burden than we currently enjoy.”
Hawes said: “Not that we can see”, while answering a question about whether there would be any potential advantages for the UK car industry to be derived from Brexit. About 186,000 people are employed in the British automotive industry which has a collective annual turnover of £82bn.
While issuing warnings about thousands of jobs being put at risk because of continued uncertainty, the SMMT had been vociferously opposing Brexit and urging continuance of membership of the single market and the customs union.
“Given the cost of stopping production, manufacturers will do everything they can to stop that happening,” Hawes said, adding that this would cost millions of pounds per day.
“You survive on the basis that you’re competitive. Once you cease to be competitive – you generally don’t shut overnight – but your ability to attract that next round of investment is that much tougher. Gradually, it’s a death by a thousand cuts.”
Regulation of diesel cars that are being scrutinized more than ever because of the “Dieselgate” emissions-rigging scandal and the continued consumer confusion related to the future taxation policies of the government are among the “perfect storm” of factors that the trade body put blame on.
Overall car production declined by 5.5% in June and has fallen by 3.3% in the first half of the year to 834,402.
(Adapted from TheGuardian.com)