Car industry calls for customs union, single market benefits

Britain’s motor industry has called on the government to keep the UK in the EU customs union and retain single market benefits as car plant output falls, jobs are lost and investment drops.

Reporting record business for Britain's carmakers, the Society of Motor Manufacturers and Traders warned the industry was in danger without urgent action to shore up confidence amid confusion over Brexit and fears that the UK will crash out of the EU.

UK car manufacturers turned over £82bn in 2017 and directly contributed £20.2bn to the economy, SMMT said. Car manufacturing jobs increased 2.8% to 186,000 and employment across the wider industry was 856,000.

SMMT said growth in 2017 was the result of investment made over the previous decade. It warned that progress could be reversed if uncertainty over the terms of the UK's departure from the EU continues.

In the first six months of 2018 output fell as demand for new vehicles declined. Nissan, Jaguar Land Rover and Vauxhall have cut jobs, and investment in new models, equipment and facilities has almost halved to £347.3m.

SMMT said decisions on new models were imminent and that action was needed to support the confidence of carmakers to invest in the UK.

The UK car industry is tied to the EU in a complex, highly connected supply chain that allows parts and finished vehicles to move freely between Britain and other EU countries. With no native producers of mass-market cars, the UK is host to foreign manufacturers that have used Britain as a business-friendly gateway to the EU.

BMW, which makes its Mini cars in Britain, has joined a growing number of large manufacturers in warning it would rethink production at its UK plants if products are stopped at the border after Brexit.

“Government must end the current uncertainty about the UK’s future trading relationship with the EU, and commit to continued membership of the customs union and maintenance of the benefits the single market delivers,” SMMT said. “Leaving the single market and customs union will bring an end to the seamless movement of goods that UK automotive relies upon, with more than 1,100 trucks from the EU bringing components to car and engine plants every day.”

SMMT calculates that UK car manufacturing’s beneficial impact on other sectors is about £202bn or 10% of the UK economy. The sector also supports skilled jobs in otherwise neglected areas such as the North East of England. In 2017 the number of training days per car worker rose 23% to 3.7 days and at least 700 apprentices were hired.