SMMT chief Mike Hawes has told just-auto that he would like to see a clear statement from the UK government that diesel engines have a future in the automotive powertrain mix. He also favours a 'technology neutral approach' that would allow the industry to further refine technologies - such as diesel - in line with market demands and affordability.

Diesel share of the UK car market is declining further this year amid ongoing uncertainty over future taxation policy towards diesel vehicles as well as adverse publicity from VW's 'dieselgate'. "Consumers need certainty about future policies towards different fuel types, including diesel," says Hawes.

"We'd like to see  a clear demonstration or statement - by government and we are seeing that in some countries, notably Germany - that diesel is very much a part of the future," he says. "It [diesel] is going to be around for twenty or thirty years, at least. There is no real alternative in the commercial vehicles sector. And for many consumers, diesel passenger cars still make absolute sense. Diesel can still deliver in terms of fuel economy and CO2. Last year we saw the UK fleet CO2 average actually go up for the first time."

Hawes champions what he describes as a 'technology neutral approach'. "If there are concerns about air quality, the industry will find a solution. We can see evidence of the kind of innovation and activity that ensures overall progress. Engineers are constantly making advances to make engines with improved performance. There's also a need to be realistic in terms of market parameters and timescales. Commercial vehicles, for example, cannot easily transition from diesel to an alternative powertrain technology.

"The industry will find a way to address the issues in a way that is affordable to the market. If you start setting particular technological ambitions or picking winners, well history is littered with examples of such industrial strategies failing."

Hawes is upbeat on the long-term prospects for the UK car manufacturing sector, but warns of headwinds impacting the sector; diesel is one and Brexit uncertainty is the other. 

"The fundamentals in Britain are still strong in terms of productivity, the models offered, the diversity we have, the growing sense of supply chain," he says. "But there are headwinds. Brexit is the biggest headwind because we don't know what that future trading relationship with our biggest market is going to be. That uncertainty will inevitably impact some investment decisions."

He cautions that a UK-EU trade deal is needed for the health of the UK auto industry. "If we leave without a deal, that will be a disaster for the UK's automotive sector. It would add huge amounts of cost and complexity. If we were unproductive, we might make that up with productivity gains. But we are relatively productive, so it's that much harder to make compensatory gains.

"Anything that interrupts the free flow and frictionless flow of goods is going to impact cost and competitiveness. We still believe that a customs union is what is required to maintain frictionless movement, avoid border hold-ups and also avoid new rules of origin requirements."

Hawes notes that there appears to be division in the UK government over the approach to future customs arrangements with the EU. "We work on wafer-thin margins and must avoid added cost and complexity," he says. "Anything that interrupts the free flow and frictionless flow of goods is going to impact cost and competitiveness. We still believe that a customs union is what is required to maintain frictionless movement, avoid border hold-ups and also avoid new - and potentially onerous - rules of origin requirements."

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