Brexit: UK auto industry could face £4.5 billion in costs

The UK motor industry faces an expenditure of £4.5 billion (approximately Rs 38,299 crore) in import and export tariff, if it does not stay in a single European Union market, according to the country’s auto industry body Society of Motor Manufacturers and Traders’ (SMMT) president Gareth Jones.

Analysis from the SMMT suggests that EU tariffs on cars could add an annual £2.7 billion (approx. Rs 22,996 crore) to imports and £1.8 billion (approx. Rs 15,332 crore) to exports. The UK motor industry body also said tariffs could push up the list price of cars imported to the UK from the continent by an average of £1500 (approx. Rs 1.27 lakh) if brands and retailers were unable absorb the extra costs. That figure is based on a 10 percent standard tariff on cars exported to and imported from the EU.

Speaking at the SMMT’s centenary annual dinner, Jones said its members – car manufacturers and traders – had told the SMMT what it wanted: “Membership of the single market, consistency in regulations, access to global talent and global markets, and the ability to trade abroad free from barriers and red tape.”

Jones admitted it wouldn’t be an easy task but said the SMMT will continue to make this case to the UK government. “We have the strength of our successful sector behind us and will ensure your voice is heard,” he told the audience at the annual dinner.

He outlined the current success of UK production for the automotive industry, setting a new record for exports. However, he warned that this was the result of multi-billion-pound investment decisions made years before the EU referendum and could not be taken for granted.

The SMMT dinner was also used to launch a report called the 'Digitalisation of Automotive Manufacturing' in the UK. It suggests that digital manufacturing through technologies such as 3D printing and artificial intelligence could significantly boost industry turnover. Produced by KPMG, the report predicts it could add £6.9 billion (approx Rs 58,779 crore) annually to industry turnover, including a £2.6 billion (approx. Rs 22,150 crore) supply chain boost, amounting to a cumulative total of £74bn (approx. Rs 6,30,457 crore) by 2035.

Jones said: “The so-called fourth industrial revolution will be a step change in manufacturing, with production lines developing more over the next five to 10 years than in the past half century.”