Currently reading: Brexit contingency plans have cost UK car industry £330m
Planning for a no-deal departure from the EU has taken money away from investment, says industry body
Rachel Burgess
News
3 mins read
31 July 2019

Contingency plans in case of a no-deal Brexit have so far cost the UK car industry £330 million, according to data released today.

Research from the Society of Motor Manufacturers and Traders found that, collectively, car makers have spent £330m on preparations for a no-deal Brexit since the referendum in 2016. The SMMT added that not all of its members had yet responded so the total figure would be higher. 

For most major UK manufacturers, these plans include stockpiling materials and components, securing warehouse space and looking at new logistics such as using alternative ports. It has also been necessary, in some cases, to purchase additional insurance, train in new customs procedures and recruit people. 

Most significantly, the movement of annual plant shutdowns from the summer to April, which were pulled forward in anticipation of the March Brexit deadline, were costly for those car makers affected. The SMMT added that this measure cannot be repeated for the proposed October departure date from the EU.

While individual makers’ expenditure was not disclosed, the SMMT said some marques had spent more than £100m, others had spent “tens of millions’ and some under a million. 

SMMT chief executive Mike Hawes said the fear of a ‘no deal’ Brexit was “causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation – money that would be better spent tackling technological and environmental challenges.”

“Pitiful” investment in car industry

In the first six months of 2019, £90m of investment was pledged in the UK car industry, comprising £23m of government funding for electrification projects, plus a couple of smaller, unnamed suppliers. By comparison, £374.3m of investment was announced in the same period last year and £647m in 2017. 

Hawes added: “We expected a decline in investment [because of product cycles]. We are not blaming it entirely on Brexit but the downturn has been precipitous. A ‘no deal’ is causing investors to sit on their hands.” He described the £90m figure as “pitiful”.

He renewed calls for “a free and frictionless trade - to have competitive just-in-time manufacturing depends on that. Any tariff threatens the industry. The worst possible outcome is no deal. If we can get a deal, the future of the industry is still strong”.

The importance of a gigafactory

Hawes also said the industry was “desperate” for a Tesla-esque gigafactory. “We want to bolster the supply chain and ensure that the UK industry moves at the pace of new technology.

“Without a Brexit deal, it would be much harder to attract Gigafactory investment. In future, value will be in batteries rather than powertrains, as it is now. We are going to need multiple gigafactories, especially to reach zero emissions.”

It was also announced today that UK car manufacturing has fallen by 20.1% in the first six months of 2019. The decline is caused by downturns worldwide and April’s widespread factory shutdowns, pulled forward in anticipation of the March Brexit deadline.

By the end of the year, UK car making is expected to be down approximately 15% year-on-year, with 1.37m units set to be produced.

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tkemp22 1 August 2019

EU made this happen

To all of you bemoaning the shrink of car manufacture in Britain, can i just remind you that this is not something that has magically happened in the last 2/3 years.

The moving of manufacturing out of the UK has been a steady flow since at least the early 2000s and it isn't just the car industry.

Just think of all the manufacturing that isn't done in the UK that used to be 20 years ago. I doubt all of that production suddenly moved in the last 36 months.

Sadly, thanks to the global economy and socialist (and protectionist) economic policies across the EU (such as the common fishing, farming, energy and industry policies) the UK is no longer the economic powerhouse it once was in terms of heavy goods and manufacturing. We are now a service economy, mainly based around the city of London.

The good news is that companies such as Geely still see us as a technical innovator and leader in certain areas. Hence the reason for them setting up a BEV research and development centre in the UK, and that's AFTER the brexit vote.

scrap 3 August 2019

The usual Brexit cheer leader

The usual Brexit cheer leader arguments surfacing here again.

If you think leaving the EU is good for UK then you are entitled to your opinion, but don’t twist the facts to pretend it is anything other than a disaster for UK car industry.

BMPF 31 July 2019

Gammon gammon gammon

Take your fingers out of your ears, you gammon-faced plonkers. 

scotty5 31 July 2019

Tunnel vision

Good news story about how Vauxhall's plant in Luton was doing so well, and for most of yesterday not a single comment by remoaners but whenever doom and gloom is mentioned, on they come. How predictable.

I know it's hard to see when you're wearing blinkers but just consider this for a second...   what does it actually cost to bring forward a factory shutdown? The fact the factory was already shutting down seems to have escaped folk. But worse still, citing car production down due to those shutdowns. How come?  All they did was bring forward a planned shutdown so how can production be down when the annual production time hasn't changed? If they are talking in quarters, then will Hawes & Co tell you production was up next quarter because the factory didn't close - er I think we all know the answer to that.

If only people used their brains to question rather than swallow everything they read like guppy fish at feeding time.

Symanski 31 July 2019

Ellesmere Port.

scotty5 wrote:

Good news story about how Vauxhall's plant in Luton was doing so well, and for most of yesterday not a single comment by remoaners but whenever doom and gloom is mentioned, on they come. How predictable.

 

You forgot to add that Vauxhall stated they would close Ellesmere Port if we get Brexit.   They specifically stated Brexit as why.

 

 

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