A British trade body has warned that the country’s annual car production is likely to drop by a third to 1 million by 2024 if Brexit leads to tariffs with the European Union; the output will be lost to other nations.
Britons are staring at an elections in just over two weeks with Prime Minister Boris Johnson promising to pass his Brexit deal as soon as possible, whilst the opposition Labour Party saying it would renegotiate Brexit and call a referendum in 2020.
If Johnson, who is leading in opinion polls, gets re-elected, it would lead to further negotiations with Brussels over Britain’s future trading terms with the EU; British automakers are seeking a continuation of free and frictionless trade with the EU – their largest export market.
The British carmaking industry, Britain’s biggest exporter of goods, has warned that falling back on the World Trade Organisation tax regime will add more than $4 billion (3.2 billion pounds) a year in manufacturing costs in, the worst case scenario.
“By 2024, falling demand and model reallocation to more competitive and welcoming production locations would see annual output falling to just 1 million vehicles per year,” said the Society of Motor Manufacturers and Traders (SMMT).
In 2018, production stood at 1.5 million cars but has fallen by 16% so far this year.
Already, Ford and Honda have announced plans to close their plants this year, while Peugeot has said it will take a decision to keep open its Vauxhall plant in northern England after the final Brexit terms are known.
“The next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain,” said Mike Hawes, SMMT’s Chief Executive.