Business, Energy and Industrial Strategy Committee says negotiations with the EU are "exercise in damage limitation" for automotive industry

A committee has warned that Britain leaving the European Union without a trade deal would be “hugely damaging” to the British car industry, according to a report by MPs.

The Business, Energy and Industrial Strategy Committee says that failure to reach a deal would lead to a 10% tariff being introduced on British-made cars exported to the EU that would, in turn, result in the shift of manufacturing to countries remaining in the EU. The report says that would put “hundreds of thousands” of jobs at risk.

Nissan and Toyota back UK despite EU single market announcement

The UK exports just under 80% of the cars it produces – which amounts to 13% of all goods exported from the UK – with 56% of those going to the EU. The report notes that 86% of all vehicles sold in the UK are imported, with 70% of that total coming from the EU.

The ‘impact of Brexit on the Automotive sector’ report, produced after the Committee heard from figures involved in both the UK and EU car industries, says that because UK car industry supply chains are “inextricably intertwined” with those of the EU, any tariffs or non-tariff barriers (such as border delays and added bureaucracy) resulting from Brexit would affect UK competitiveness.

Toyota to produce new Auris in UK

It adds that future trade deals would “need to accommodate the largely European content of cars built in the UK”, and calls for a deal to allow UK content in cars to be classed as EU under the rules of origin.

Aston Martin: no Brexit deal could be 'semi-catastrophic' for firm

When considering the post-Brexit regulatory framework, the report noted: “We have not identified any potential benefits from [regulatory] divergence from the EU, only costs. We recommend that the Government seeks in the negotiations to preserve existing arrangements for the certification of vehicles throughout the EU.”

Our Verdict

BMW 3 Series

The BMW 3 Series' outstanding performance and handling makes it a complete and consummate all-rounder - but then the Jaguar XE and Alfa Romeo Guilia arrived

Find an Autocar car review

Driven this week

Car industry: EU single market is 'critical' to success

The report also looked at potential opportunities that might arise from Brexit, through Britain’s ability to negotiate independent trade deals with non-EU countries. It noted: “We found that it is unrealistic to expect an expansion of trade overseas to outweigh the loss of trade to Europe arising from a hard Brexit. Furthermore, any new bilateral trade deals secured by the Government are unlikely to lead directly to a significant increase in investment and jobs in the UK automotive sector.

“Retaining good access to the single market is more important than securing the freedom to secure new trade deals with third countries.”

Jaguar Land Rover to drop production due to Brexit uncertainty and diesel confusion

When considering freedom of movement within, the EU report also calls for the Government to prioritise ensuring key manufacturing sectors such as the car industry can “retain sufficient access to essential skills to ensure that gaps can be filled adequately with UK workers.”

The report concludes: “There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation.”

The 11-member Business, Energy and Industrial Strategy Committee is chaired by Labour’s Rachel Reeves MP. The committee features Labour, Conservative and Scottish National Party members.

Read more

Aston Martin: no Brexit deal could be 'semi-catastrophic' for firm

Car industry: EU single market is 'critical' to success

Nissan and Toyota back UK despite EU single market announcement

Jaguar Land Rover to drop production due to Brexit uncertainty and diesel confusion

Toyota to produce new Auris in UK

Join the debate

Comments
33

1 March 2018

WOuld it not be damaging to the Germans and French too ?

1 March 2018
mpls wrote:

WOuld it not be damaging to the Germans and French too ?

Tipical brexiteer atitude: instead of thinking about the UK, let's hope we hurt those ugly Germans.

1 March 2018
Andrew1 wrote:

mpls wrote:

WOuld it not be damaging to the Germans and French too ?

Tipical brexiteer atitude: instead of thinking about the UK, let's hope we hurt those ugly Germans.

So would it be or would it be not damaging to other economies too? Or is this damage limited solely to the U.K.? I’m not sure if this is brexiteering or a genuine question. Can you help Andrew1?

Spanner

1 March 2018
Spanner wrote:

Andrew1 wrote:

mpls wrote:

WOuld it not be damaging to the Germans and French too ?

Tipical brexiteer atitude: instead of thinking about the UK, let's hope we hurt those ugly Germans.

So would it be or would it be not damaging to other economies too? Or is this damage limited solely to the U.K.? I’m not sure if this is brexiteering or a genuine question. Can you help Andrew1?

 

There will be damage on both sides, but given how dependent Britain is on foreign corporations (which control a third of the British economy) it's plain to see where the damage will be concentrated.

1 March 2018

The value chain of car production does not allow a hard Brexit. Anything above Zero duty will either end current car production in the UK or it will remain and local suppliers will take up the slack. Investing in an engine plant just for the MINI would probably not be viable. Therefore production of MINIS may go to Europe or China. France and German car exports represent about 20% of their total production  to the UK market. 

1 March 2018
mpls wrote:

WOuld it not be damaging to the Germans and French too ?

 

Potentially, but bear in mind the EU corporations which own UK subsidiaries and which will suffer increased overheads as a direct result of customs barriers. Those subsidiaries will be the first to suffer should those corporations choose to trim overheads as a result. Bear in mind as well that Nissan is a third owned by Renault.

1 March 2018

'The report concludes: “There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation.”'

That report is a load of rubbish. Leaving the EU will give us many advantages for running companies, designing cars, manufacturing cars and marketing cars without EU interference.

David Cameron promised us that if we voted to leave the EU then that would be the final decision and that there wouldn't be another negotiation and another referendum.

Why can't these MPs respect the outcome of the referendum?

1 March 2018
max1e6 wrote:

'The report concludes: “There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation.”'

That report is a load of rubbish. Leaving the EU will give us many advantages for running companies, designing cars, manufacturing cars and marketing cars without EU interference.

David Cameron promised us that if we voted to leave the EU then that would be the final decision and that there wouldn't be another negotiation and another referendum.

Why can't these MPs respect the outcome of the referendum?

What are the advantages for the car industry? 

1 March 2018

Potential tariff-free access to markets outside the EU which constitute at least 84% (and growing) of the World Economy.

Potential regulatory advantages over EU competitors.

Potential competitive advantage provided by a reduction in the cost of living as a result of dropping EU-dictated tariffs on food and clothing from developing countries.

Potential tax cuts made possible by stabilising population growth, reducing the need for investment in national infrastructure and public services.

1 March 2018
TheBritsAreComing wrote:

Potential tariff-free access to markets outside the EU which constitute at least 84% (and growing) of the World Economy.

Potential regulatory advantages over EU competitors.

Potential competitive advantage provided by a reduction in the cost of living as a result of dropping EU-dictated tariffs on food and clothing from developing countries.

Potential tax cuts made possible by stabilising population growth, reducing the need for investment in national infrastructure and public services.

 

Brilliant, except that the sole reason foreign manufacturers are situated in the UK is to take advantage of the single market. Over 80% of the production of Honda, Nissan and Toyota in the UK heads directly to the EU. Their other worldwide markets are already covered by local manufacturing facilitis elsewhere.

Pages

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week