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UK car industry on “red alert”: Brexit uncertainty had done enormous damage

Inward investment fell 46.5% to £588.6m last year from £1.1bn in 2017, the Society of Motor Manufacturers and Traders (SMMT) says.

Investment in the UK car sector almost halved last year and output tumbled as Brexit fears put firms on “red alert”, the industry's trade body said. Inward investment fell 46.5% to £588.6m last year from £1.1bn in 2017, the Society of Motor Manufacturers and Traders (SMMT) says.

Production fell 9.1% to 1.52m vehicles, with output for the UK and for export falling 16.3% and 7.3% respectively. Brexit uncertainty has “done enormous damage”, said SMMT chief Mike Hawes.

But the impact so far on output, investment and jobs “is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely,” he added.

“With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert,” he said.

Politicians must do whatever it takes to avoid a no-deal, he said. His gloomy prognosis follows strong warnings from other business groups on Wednesday. Carolyn Fairbairn, director-general of the CBI, said Tuesday's vote to renegotiate the UK's withdrawal deal “feels like a real throw of the dice”.

Stephen Kelly, chief executive of Manufacturing Northern Ireland, told the BBC that firms there were “in despair and really confused” about what was going on.
Mr Hawes said that, despite the Commons vote on Tuesday evening, “nothing has changed”.

The 16.3% fall in production of cars destined for sale in the UK was driven by uncertainty over the future of diesels, regulatory changes, and falls in consumer and business sentiment, according to the SMMT. However, exports to the EU fell by 9.6%, less steep than the fall in domestic production.

Overall, the EU still accounts for the vast majority of UK exports, 52.6% or 650,628 cars. Although exports to the US rose 5.3%, largely due to demand for premium models, Mr Hawes warned that this improvement could reverse if tariffs are imposed in post-Brexit tax changes.

Other key markets outside the EU would also be hurt, he said. Exports last year to Japan increased by 26% and by 23% to South Korea, but he pointed out that both countries were subject to preferential EU trade agreements.

Exports to China slumped 24.5%. Jaguar Land Rover (JLR), Britain's biggest carmaker, has already underlined the pain being felt from a sales slowdown in China. Earlier this month JLR confirmed it was cutting 4,500 jobs, blaming Brexit uncertainty, a slump in diesel sales, and China's economic slowdown.