The triggering of Article 50 has started a race against time to agree a tariff free deal with the EU according to SMMT chief executive Mike Hawes. The Society of Motor Manufacturers and Traders is concerned about safeguarding the future of the sector in the UK, ensuring automotive jobs and performance are not affected.
If a deal is not agreed WTO rules would be adopted. Currently these are 10% for cars and between 2.5% and 4.5% for different parts. The first would make vehicles exported from the UK more expensive as well as increasing the price of those vehicles imported into the country. The price of vehicles assembled here would rise due to increased expenses on parts.
In their own calculations the SMMT calculated that the 10% tariff would see £1.8 billion added to the price of vehicles exported from the UK. This would undoubtedly cause the number of vehicles sold to fall.
The situation is worse for imported vehicles. The 10% tariff would add approximately £2.7 billion. This equates to £1,500 per vehicle. Consumers in the UK would find themselves paying more for vehicles and could see a big drop in choice. Higher costs may result in many manufacturers deciding to reduce the number and variety of vehicles they import.
The SMMT praised the Government for working to create and support conditions in the automotive industry but called for more. They believe the automotive industry should be at the heart of negotiations for a deal between the UK and EU.
The SMMT even went as far as setting out what the priorities for the automotive industry should be. They suggest focusing on:
Achieving single market benefits with zero tariffs and no trade barriers
Maintaining the arrangements of the Customs Union
Guaranteeing access to overseas talent
Securing the future of trade relationships
At John Gibson Associates we are monitoring the situation carefully and hoping for the very best outcome for the UK. As a leading recruiter for automotive jobs in the UK we will be on hand to help all businesses who need us.