London: There is nothing good to come from exiting the European Union for the UK auto industry, leaving the government only one option: limiting the damage.
That’s the view of an impact assessment from the Business, Energy and Industrial Strategy Committee published on Thursday, which urged Prime Minister Theresa May and her cabinet to take a “pragmatic” approach to negotiations with Brussels. The report, arriving amid a hardening of positions in the talks with the EU, comes after opposition Labour Party leader Jeremy Corbyn raised the dangers of a hard Brexit for carmakers.
“There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future,” according to the report compiled by 11 cross-party lawmakers. “The negotiations are an exercise in damage limitation. The government should acknowledge this and be pragmatic.”
The auto industry has been a key topic of debate post-Brexit due to its reliance on tariff-free trading to allow components to travel in and out of the country in the manufacturing process. The UK employs nearly 1 million people in the sector either directly or through supply chains and the industry makes up 13 per cent of all goods exported from Britain, the second highest from any one sector, according to the report.
Among lawmakers’ chief concerns is the introduction of a 10 per cent tariff on UK exports and imports in the event of a no-deal Brexit, which might shift production away from Britain. Profit margins are small, between 2 and 4 per cent, and tariffs could make some UK manufacturing unsustainable. The committee also said it could find no upside to breaking with EU regulations and recommended the government tries to preserve the existing framework.
Since October, Vauxhall Motors has announced 650 job cuts at its factory at Ellesmere Port, while Jaguar Land Rover is also planning UK production cuts, citing Brexit as a factor.
Investment from Japan, which has been key for the British car manufacturing industry over the last 40 years, may also be under threat. The Asian country’s UK ambassador warned last month that “no private company can continue” if profitability falls away.
Toyota to keep plant in UK
Toyota Motor will keep its plant in Britain as the sole European producer of its Auris hatchback in a bet that the country can remain competitive after it negotiates an exit from the European Union next year. The world’s second-biggest auto manufacturer will make the third-generation Auris at its Burnaston factory near Derby in northern England, powered by engines from the Deeside facility in Wales, it said on its website on Wednesday.
Around 85 per cent of Toyota’s British output is exported, so “continued free and frictionless trade between the UK and Europe will be vital for future success,” Johan van Zyl, the company’s regional president, said in the statement.
