if we pull out of EU single market, but one expert claims that's not true as the weak pound and excellence will bolster sales
- Carmakers seen as industry with greatest to lose if tariffs arrive with EU
- New car production has hit a record high in the UK
- Industry expert says weaker pound and high productivity can beat Brexit blues
The car industry will unveil its best manufacturing figures for 44 years this week – including soaring exports – but news of the boom may be overshadowed by fresh warnings of the threat from Brexit.
Mike Hawes, head of the Society of Motor Manufacturers and Traders, will appear before MPs this week and is widely expected to deliver a dire warning of the threat faced by the industry.
However, one critic has warned that the automotive industry is at risk of talking itself into a crisis. ‘You cannot keep talking the industry down like this,’ said Garel Rhys, professor of motor industry economics and director for automotive industry research at Cardiff Business School.
On the move: Many expensive marques such as Rolls-Royce are exported to countries outside the EU
The SMMT urged the Government to stay in the single market after the Brexit vote – an option ruled out by the Prime Minister last week.
The industry is now keen to secure a customs deal with Europe that would save it from billions of pounds in tariffs on cars exported to the Continent.
‘If tariffs are imposed it will have a huge impact on the industry,’ said Helen Foord, at Vauxhall’s parent company General Motors.
‘We’re talking hundreds of millions of pounds in an industry not known for huge profits. We could be at a huge competitive disadvantage.’
Figures due this week will show that Britain produced more than 1.7million cars last year, the highest total since 1972.
But with 80 per cent sold as exports, the Brexit vote means nothing is being taken for granted. Foord said: ‘Those figures are from before Brexit. Remember we haven’t had Brexit yet.’
Last week, Hawes said not having a tariff-free agreement in place ‘would jeopardise investment, growth and consumer choice’. He added: ‘Achieving this will not be easy and we must, at all costs, avoid a cliff-edge, and reversion to World Trade Organisation tariffs, which would threaten the viability of the industry.’
The SMMT has estimated that the cost of taking the UK out of the single market would add £1,500 to the cost of buying a car in the UK, and a 10 per cent tariff on imports would cost the industry £2.7billion a year.
The car industry will unveil its best manufacturing figures for 44 years this week
Lower pound and high productivity will help UK carmakers beat Brexit
But while the car industry raises the alarm, some observers say this could do more harm than good and it should not talk itself down.
Prof Rhys, an expert from Cardiff Business School, who last year produced a report for the Government on the impact of Brexit on Nissan’s Sunderland plant, warned: ‘Loose talk can cost jobs.’
According to Prof Rhys, 650,000 jobs rely on Nissan’s presence in the UK. Its decision to build the X-Trail and Qashqai in Sunderland was seen as a vote of confidence and a sign of its belief in Government assurances that Brexit would not hurt Nissan’s competitiveness.
But just two days ago in Davos, Nissan boss Carlos Ghosn said the group would re-examine its investment strategy once the terms of Brexit become clear. He told reporters: ‘When the package comes, you will have to re-evaluate the situation, and ask will the competitiveness of your plant be preserved?’
‘We’re going to have to make decisions on investment within the next two to three years. So the faster the Brexit results come, the better.’
Prof Rhys argued that the lower exchange rate for the pound and high productivity of UK car manufacturers would mean tariffs should not be an insurmountable problem.
‘You should be able to cover the effects,’ he said. ‘Plus if Donald Trump decides European Union tariffs are too onerous, the UK will have preferred nation status.’
Many cars produced in Britain, such as Bentley, Rolls-Royce, McLaren and Aston Martin, are exported outside the EU anyway to the US or Asia, he said.
‘We export 80 per cent of production and import 85 per cent of the cars we drive,’ he said.
‘The British-owned manufacturers are all enjoying record years. Because we make expensive, upmarket cars we are far removed from competition with cheaper imports from the rest of the world.’
So far there are not many in the industry who share his confidence.
http://www.mailonsunday.co.uk/money/news/article-4143522/Manufacturers-dire-warning-sales-drive-record.html
