Business

UK car firms 'want to be in EU single market'

Cars in front of union jack flag Image copyright Getty Images

The success of the UK motor industry could be "jeopardised" if the UK leaves the single market following Brexit, a senior industry figure has said.

The chief executive of the Society of Motor Manufacturers and Traders (SMMT) told the BBC the sector would be under threat outside the single market.

Mike Hawes told BBC business editor Simon Jack that the industry's success came from being in the single market.

The European Union is the UK motor industry's biggest export market.

Mr Hawes, who has warned on previous occasions that the industry's future growth may be hit, was speaking in Paris where he is attending the city's motor show.

He said: "Don't be blinded by the good news that you're seeing not just around our sector but around business in general. We're very concerned that the future state of the automotive industry and the success could be jeopardised if we're not in the single market."


Analysis: Simon Jack, BBC business editor

The UK car industry kicked off its own Tour de France today in the shadow of the Eiffel Tower on the sidelines of the Paris Motor Show.

Vauxhall, Nissan, Jaguar, Aston Martin, Mini, Toyota and McLaren models were lined up alongside each other.

However, this showroom was not for selling cars, but for issuing the auto sector's starkest warning yet.

It says only continued membership of the European single market can guarantee the success of the UK car industry.

The car industry is particularly sensitive to tariffs, as components and finished products can criss-cross over the Channel several times. Any additional frictional cost can throw sand in the engine of that business and its extended supply chains.

Membership of the single market ensures tariff-free trade, but comes at the price of freedom of movement of people - an unacceptable outcome for most who voted Leave.

UK auto's starkest warning yet


He added that the growth of the industry would be under threat outside the single market "because the success we've had and the strength of it has been built on being part of the single market".

The UK's membership of the EU's single market means it has free movement of goods, finance and people around the EU, without any tariffs or other barriers, as well as giving it a say on how the EU's rules are written.

While the UK would still be able to export to the single market member countries even if it were not itself a member, it would have to negotiate trade deals, which could involve paying tariffs, customs delays and having to abide by EU rules, over which it would have no say.

Image copyright PA

In the first half of the year, 57.3% of UK car exports, a total of 502,647 cars, went to the EU, followed by the US, which had 12.1% of exports.

"It's our biggest export market," Mr Hawes said. "We're an export-led industry and the way that the parts move in and out of different countries, it's a highly complex process. Being part of that single market not just makes it easy but makes it affordable."

His comments were backed up by Hanno Kirner Executive Director of Corporate and Strategy at Jaguar Land Rover. "In the worst case if we were to introduce duties, and if we were to have 10% duties to pay on parts, for instance, that would be something that customers would have to pay, it would potentially affect jobs," said Mr Hanno.

"Also if we export to Europe and become less competitive maybe we would sell less, we would have fewer jobs in the UK. So we are very concerned we believe that maintaining today's freedom of trade is terribly important to all of us," he added.

No guarantees

Mr Hawes was also asked if his hopes of remaining in the single market were unrealistic amid talk of UK government plans to tighten border controls. "The challenge to the government is to ensure that industry, which creates the jobs on which so many people depend, has what it needs for its future success, but also address... concerns about immigration," he said.

European leaders have repeatedly stressed that the UK cannot stay in the single market without accepting the free movement of EU citizens.

Mark Garnier, minister at the Department for International Trade, is also attending the Paris Motor Show. Commenting on the SMMT's remarks on the need to remain in the single market, he said: "We can't guarantee anything, but as I said, we are not going to provide a running commentary on what exit is going to look like.

"But there are elements that are within the SMMT and the automotive sector and indeed any other sector that we need to protect and in the case of the automotive sector, those things we must protect and try to achieve is zero-tariff access to this market of 500 million people in the EU," he added.

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