The UK’s car industry could face a ‘cliff edge’ if tariff-free trade is not guaranteed in Brexit negotiations, according to the Society of Motor Manufacturers and Traders (SMMT).
On Monday, the UK’s Secretary of State for Exiting the European Union (Brexit Secretary) David Davis was dispatched to Brussels to begin the Brexit negotiations.
The SMMT called for the UK government to seek an interim arrangement with the EU that would keep the UK in the single market and customs union until a final deal is agreed.
The body doubted that a comprehensive, final trading relationship between the UK and EU could be agreed by March 2019, when Brexit will occur in accordance with Article 50 of the Lisbon Treaty.
It warned against World Trade Organisation rules, which it called “the worse foreseeable outcome for the sector, its employees, and the British economy.”
Mike Hawes, chief executive of the SMMT, said: “Our biggest fear is that in two years’ time we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO terms.
“We need the government to seek an interim arrangement whereby we stay in the single market and customs union until that new relationship is implemented.”
Close Brothers Motor Finance has warned that the UK’s car industry could suffer due to uncertainty surrounding Brexit.
The motor finance provider said that Brexit had already affected the purchasing decisions of millions of prospective car owners.
In its latest ‘Britain under the Bonnet’ report, Close Brothers Motor Finance found that almost 5m prospective car owners are reconsidering purchasing a vehicle in the next three years due to Brexit.
The report also found that 17% of current drivers, an estimated 4.7m, said that Brexit made them more likely to buy a used car, a cheaper model, or hold off on their car purchase.
James Broadhead, chief executive officer of Close Brothers Motor Finance said: “Despite having been an undeniable growth industry in recent years it’s difficult to dispute that we are entering uncertain times for our industry, especially now Brexit discussions are underway.”
Of the UK car dealers surveyed, 43% said a potential recession was the biggest threat to their business.