Britain's Auto Industry Foresees Doom Without EU Deal Before Hard Brexit

Matt Posky
by Matt Posky

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), Britain’s main industry group, claims automakers were becoming increasingly concerned with the nation’s departure from the European Union. Prime Minister Theresa May wants a solution that would allow Britain to maintain strong trade ties with the EU while allowing her country to maintain autonomy, but hasn’t found much success.

U.S. President Donald Trump claims a deal with the United Kingdom is absolutely possible, saying the relationship between the two countries is “the highest level of special” late last month. But he also noted that the EU would complicated matters if Britain adhered to its trade laws after Brexit, which is just eight months away.

The European Union doesn’t seem to want to let Britain go, and is nudging the country to stick to its rules by not venturing out to make its own trade arrangements. Critics say this effectively makes the island nation a “vassal state” to the EU, completely defeating the point of Brexit. However, many are fearful that leaving the union and ignoring its mandates could have negative repercussions in the long term — especially in regard to finance and trade.

Hawes said the earlier meeting between Trump and European Commission President Jean-Claude Juncker on trade was more encouraging, even though they didn’t expand upon the elimination of automotive tariffs (which Trump previously suggested for European car imports). However, there is no reason to think the U.S. would be adverse to making special exceptions for Britain if it could leave the EU in earnest and cut deals of its own.

“What we would say is that any increase in tariffs would be significant and would be damaging both to the U.S. and in Europe, and I include [Britain] in Europe when it comes to exports,” Hawes said.

Despite the United States being a sizable market, the home front is the bigger issue. Automotive production accounts for almost a tenth of British manufacturing output and a significant portion of those vehicles stay within the EU. If no deal is reached, those autos would be subject to the union’s import tariffs of 10 percent.

“No deal … is just not an option. It would be seriously damaging to the industry not just in the UK but in Europe as well,” Hawes said during SMMT’s mid-year update on British car production.

According to Reuters, British car output in the first six months of 2018 fell by an annual 3.3 percent with disappointing domestic demand canceling out stronger export volume. In June, overall production fell 5.5 percent compared with June 2017, while export markets rose by 6.0 percent.

Hawes said the domestic slump was attributable largely to changes in model cycles and manufacturers getting ready for the stringent new emission standards. He estimates production will recover in the coming months.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Starbird2005 Starbird2005 on Aug 04, 2018

    What's often overlooked is something like 80% of all formula one cars are made in the UK. There's a thriving small car industry outside of the big ones. Brexit is one of the most stupid decisions ever made by a British government. Even the Brexiters like Rees-Mogg is moving his money out (over to Ireland) and saying it will take 50 years before the UK will see any benefit from leaving (but he's still in favor because the disaster might make him Prime Minister). The whole thing has been devastating to the UK economy and its getting worse with the latest estimates being that they will crash out without a deal with odds of 1 in 3. Insane.

  • Cicero1 Cicero1 on Aug 06, 2018

    More lies from globalists and soros, et al. The facts: Britain is thriving post brexit: "British trade exports have defied expectations by hitting a record high of £616 billion as international trade secretary Liam Fox works on securing post-Brexit bilateral agreements with some of the world’s largest economies. Official figures showed that 55 percent of exports were to nations outside of the European Union (EU) in 2017, with almost a fifth of sales going to the United States, according to the Department for International Trade, established following Britain’s vote to Leave the European Union. Overall, exports of goods rose by 13 percent to £339 billion, with services increasing to £277 billion (seven percent). The figures also revealed that the trade deficit between the United Kingdom and non-EU countries was shrinking, decreasing by £5 billion compared to the year before, amounting £25.8 billion."

    • Astigmatism Astigmatism on Aug 06, 2018

      You realize Brexit hasn't actually happened yet, right? Meanwhile, in the reality-based community, the pound fell to its lowest point in eleven months today after Liam Fox warned that a no-deal Brexit is now a 60:40 odds-on likelihood.

  • Ted Lulis Head gaskets and Toyota putting my kids through college👍️
  • Leonard Ostrander Plants don't unionize. People do, and yes, of course the workers should organize.
  • Jalop1991 Here's something EVangelists don't want to talk about, and why range is important: battery warranties, by industry standard, specify that nothing's wrong with the battery, and they won't replace it, as long as it is able to carry 70% or more of its specified capacity.So you need a lot of day 1 capacity so that down the road, when you're at 70% capacity with a "fully functioning, no problem" car, you're not stuck in used Nissan Leaf territory."Nothing to see here, move along."There's also the question of whether any factory battery warranty survives past the original new car owner. So it's prudent of any second owner to ask that question specifically, and absent any direct written warranty, assume that the second and subsequent owners own any battery problems that may arise.And given that the batteries are a HUGE expense, much more so than an ICE, such exposure is equally huge."Nothing to see here, move along."
  • Roger hopkins The car is in Poland??? It does look good tho...
  • Kwik_Shift_Pro4X The push for EV's is part of the increase in our premiums. Any damage near the battery pack and the car is a total loss.