What does the future hold for the UK automotive industry beyond Brexit?

Operations director, Rory Watts takes a look at the biggest issues facing the automotive industry as we edge toward Brexit.

“The importance of the automotive industry to the UK economy shouldn’t be underestimated – exports currently total £40.1bn; 13% of the UK’s total exports. Despite concerns around the viability of UK manufacturing plants, in the short-term we’ll continue to see 80% of the vehicles assembled here exported, 50% destined for Europe. Whatever the outlook long-term, the automotive industry must brace itself for the short-term challenges ahead.

“While it’s fair to say that Brexit – and the growing spectre of a no-deal scenario – is causing its fair share of sleepless nights, with the right planning and preparation, the industry will be able to weather the storm. The continuation of frictionless trade between the EU and the UK is a vital piece of the puzzle.

“Forward-thinking businesses have already begun contingency planning, but concern remains around unknown elements such as tariffs. At present, there is no deal in place with the EU, and the UK has rolled over trade deals with just seven of the 69 countries currently covered by EU arrangements. Analysis from the SMMT suggests that EU tariffs on cars alone could add an annual £2.7bn to imports and £1.8bn to exports. Falling back on World Trade Organisation rules would leave British car exporters facing EU import tariffs of around 10%, and around 4.5% on components. To be operating without clarity on tariffs so close to the withdrawal date is far from ideal.

“However, on a more positive note, HMRC has demonstrated its willingness – at least in the immediate term – to ease the pain post-Brexit with the announcement that ENS will be postponed for the first six months. During that time, HMRC will not enforce safety and security checks, giving companies more time to prepare. But, while the move has been welcomed by industry bodies, questions have been asked around whether it goes far enough, with some suggesting it’s simply a stay of execution. Only time will tell.”

© Freight Business Journal 2019

This is an excerpt from an article that originally featured in Freight Business Journal’s March 2019 edition. Click here to read the magazine and turn to page 18 for the full article.

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