With one year to go until the UK leaves the European Union (EU), the Society of Motor Manufacturers and Traders (SMMT) has set out its priorities to 'assure the UK automotive industry's future success'.
The move follows agreement of a Brexit transition period, designed to allow business to continue as usual while a new UK-EU trading relationship is negotiated. While the deal provides some welcome breathing space, the industry now seeks 'rapid progress on key automotive concerns to avoid another cliff edge' on 31 December 2020 when the transition period ends.
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The SMMT says that with decisions on new vehicle models in the UK due in the next 12 months, it is essential that both industry and government do all they can to secure this investment and safeguard the thousands of jobs that accompany such decisions.
New figures from the 'Production Outlook', an independent forecasting report released today, predict there will be modest fall in UK vehicle production to 1.729m units in 2018 and 1.713m in 2019. Assuming 'positive production decisions are made for the UK on a number of future models', production could climb to over 1.8m units by 2023.
The SMMT said, again, that the continued ability to trade freely with Britain's biggest trade partner, the EU, and key global markets is essential but also said 'UK competitiveness starts with local conditions'. It said business rates, capital allowances and energy costs must all be globally competitive; training and skills for a productive workforce must focus on new technologies and the UK supply chain must be attractive to investment.
All of this will be vital if the UK is to remain a global destination for future investment in new technologies, including digital manufacturing, lightweight materials, vehicle electrification and connected and self-driving vehicles. The Government's Industrial Strategy, published last year, and the accompanying Automotive Sector Deal recognise this, but 'cross-government policies must align to deliver on the ambition', SMMT said.
"The next major hurdle will be securing a new, comprehensive trade agreement with the EU and our partners across the world."
Mike Hawes, SMMT Chief Executive, welcomed the transition deal between the UK and EU but said the next hurdle is securing a comprehensive trade agreement between the UK and EU. "Last week's deal on the transition period was essential, providing a short term boost and a degree of certainty for investors," he said. "The next major hurdle will be securing a new, comprehensive trade agreement with the EU and our partners across the world. In the meantime, government must help make the UK as competitive as possible. Government's Industrial Strategy and Automotive Sector Deal are positive steps but we need concrete action if we are to stay ahead in what is an intensely competitive global environment. New figures out today show the positive impact our industry has on other sectors so it is vital that automotive competitiveness is front of mind for policy makers."
Remaining part of the single market and customs union, continued access to EU talent, and the ability to benefit from preferential EU trade agreements with third countries remain the UK Automotive industry's priorities in the future EU-UK relationship, the SMMT said. However, it also maintains that equally important, is the need for the UK to maintain influence within EU regulations, both during transition and after Brexit, as critical decisions are taken on shared issues such as CO2 and data – issues which will ultimately affect UK consumers, exporters and other businesses.
The Production Outlook report's key findings:
- UK vehicle production likely to fluctuate around the 1.7-1.8m level over the next few years;
- Following a total of 1.731m vehicles [note all vehicles, not just passenger cars, as table below – ed] made in 2017, a modest fall to 1.729m Is expected for 2018, followed by 1.713m in 2019;
- By 2023, production is expected to climb over 1.8m, depending on a number of production decisions secured for the UK;
- If such investments are not secured for the UK, production will likely fall towards 1.6m;
- The report also said the UK 'will reach an agreement with the European Union, which will include a transition period of just under two years, to December 2020. Until then, the automotive industry will operate just as it does now, although in legal terms it will leave the Single Market and the Customs Union at some point.'
- The report suggests a 'zero-tariff agreement is reached with the EU for the trading environment after December 2020'.
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