UK car production could drop 7.6% after Brexit

Industrial gears

March 28, 2018 - Automotive production in the UK could fall by 7.6% over the next five years if car makers decide not to produce new models in the UK after Brexit.

With a year to go before the UK officially leaves the EU, it is essential both industry and government do “all they can” to make sure investments stay in the UK, said the Society of Motor Manufacturers and Traders (SMMT).

For more information on BREXIT and its potential implications click here to read insight from BDP’s UK Country Manager, Anthony Akerman. 

While the ability to trade with the EU was “essential”, the trade body said competitiveness “starts at home”.

“Business rates, capital allowances and energy costs, for instance, must all be globally competitive; training and skills for a productive workforce must focus on new technologies and the UK supply chain must be attractive to investment,” it said.

SMMT said the next 12 months would be crucial as a number of manufacturers will be making key decisions on where to build new models.

Releasing its latest production figures and forecasts, SMMT said 1.731m vehicles were produced in the UK in 2017, and predicted a slight drop in production to 1.729m in 2018. If “positive production decisions” are made for the UK over a number of future models, production could increase to more than 1.8m vehicles in 2023.

But if over the next 12 months manufacturers decided to build new models elsewhere, UK production could drop to 1.6m vehicles by 2023. This would be a fall of 7.6% on 2017.

SMMT said while the recent agreement on a transition period provided some short-term security for investors, the automotive industry now faced “another cliff edge” when the transition period ends on 31 December 2020.

Mike Hawes, SMMT chief executive, said as government worked towards a comprehensive trading agreement with the UK, it needed to help make the UK competitive as possible. “Government’s Industrial Strategy and Automotive Sector Deal are positive steps but we need concrete action if we are to stay ahead in what is an intensely competitive global environment,” he said.

Source: CIPS