UK auto industry faces £4.5 billion car tariff threat

The UK motor industry faces the threat of a £4.5 billion car tariff if the country does not stay in a single EU market, according to the 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 to imports and £1.8 billion 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 £1,500 if brands and retailers were unable absorb the extra costs. That figure is based on a 10% 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, citing 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.

He said: “We need to create the right conditions for future competitiveness, for developing skills and securing the strength of our economy by investing in R&D and enabling new technologies to be developed here in the UK. The challenge now is to make a success of the new future. We want a strong UK economy and we want to see the UK's influence in the world enhanced. But this cannot be at the expense of jobs, growth or being an open, welcoming trading nation.”

Commenting on the strength of the relationship between government and industry, Jones said the government had put industrial strategy at the heart of business but added that it faces its toughest challenge in leaving the EU. “We must make the right decisions: on trade, on regulations and on business competitiveness," he said.

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 annually to industry turnover, including a £2.6 billion supply chain boost, amounting to a cumulative total of £74 billion 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.”

The dinner marked the end of Jones's two-year tenure as SMMT president. He retires at the end of this year and his successor will be Tony Walker, deputy managing director of Toyota Motor Manufacturing UK and boss of Toyota Motor Europe, London.

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