Currently reading: Brexit: lack of deal would be damaging to UK car industry, say MPs

Business, Energy and Industrial Strategy Committee says negotiations with the EU are "exercise in damage limitation" for automotive industry

A committee has warned that Britain leaving the European Union without a trade deal would be “hugely damaging” to the British car industry, according to a report by MPs.

The Business, Energy and Industrial Strategy Committee says that failure to reach a deal would lead to a 10% tariff being introduced on British-made cars exported to the EU that would, in turn, result in the shift of manufacturing to countries remaining in the EU. The report says that would put “hundreds of thousands” of jobs at risk.

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The UK exports just under 80% of the cars it produces – which amounts to 13% of all goods exported from the UK – with 56% of those going to the EU. The report notes that 86% of all vehicles sold in the UK are imported, with 70% of that total coming from the EU.

The ‘impact of Brexit on the Automotive sector’ report, produced after the Committee heard from figures involved in both the UK and EU car industries, says that because UK car industry supply chains are “inextricably intertwined” with those of the EU, any tariffs or non-tariff barriers (such as border delays and added bureaucracy) resulting from Brexit would affect UK competitiveness.

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It adds that future trade deals would “need to accommodate the largely European content of cars built in the UK”, and calls for a deal to allow UK content in cars to be classed as EU under the rules of origin.

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When considering the post-Brexit regulatory framework, the report noted: “We have not identified any potential benefits from [regulatory] divergence from the EU, only costs. We recommend that the Government seeks in the negotiations to preserve existing arrangements for the certification of vehicles throughout the EU.”

Car industry: EU single market is 'critical' to success

The report also looked at potential opportunities that might arise from Brexit, through Britain’s ability to negotiate independent trade deals with non-EU countries. It noted: “We found that it is unrealistic to expect an expansion of trade overseas to outweigh the loss of trade to Europe arising from a hard Brexit. Furthermore, any new bilateral trade deals secured by the Government are unlikely to lead directly to a significant increase in investment and jobs in the UK automotive sector.

“Retaining good access to the single market is more important than securing the freedom to secure new trade deals with third countries.”

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When considering freedom of movement within, the EU report also calls for the Government to prioritise ensuring key manufacturing sectors such as the car industry can “retain sufficient access to essential skills to ensure that gaps can be filled adequately with UK workers.”

The report concludes: “There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation.”

The 11-member Business, Energy and Industrial Strategy Committee is chaired by Labour’s Rachel Reeves MP. The committee features Labour, Conservative and Scottish National Party members.

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James Attwood

James Attwood, digital editor
Title: Acting magazine editor

James is Autocar's acting magazine editor. Having served in that role since June 2023, he is in charge of the day-to-day running of the world's oldest car magazine, and regularly interviews some of the biggest names in the industry to secure news and features, such as his world exclusive look into production of Volkswagen currywurst. Really.

Before first joining Autocar in 2017, James spent more than a decade in motorsport journalist, working on Autosport, autosport.com, F1 Racing and Motorsport News, covering everything from club rallying to top-level international events. He also spent 18 months running Move Electric, Haymarket's e-mobility title, where he developed knowledge of the e-bike and e-scooter markets. 

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Peter Cavellini 1 March 2018

Hmmmm......

Having skim read a few posts hear it seems to me that what pro brexiteers don’t want to understand is the facts that, to start from scratch again adds a decade onto the 10 years so far, and they think this will be our path to making the UK GREAT AGAIN(?), but what about year one of the master plan?, even more  employment, more strain on essential services, more homeless, less money for local councils, I could name more, no, Brexit is bad, we need another referendum!, even some pro Brexiteers have changed there minds......!!!

TheBritsAreComing 1 March 2018

Peter Cavellini wrote:

Peter Cavellini wrote:

it seems to me that what pro brexiteers don’t want to understand is the facts that, to start from scratch again adds a decade onto the 10 years so far

In what way are we starting from scratch?

Spanner 1 March 2018

Who was it said...I

”if I torture data enough it will tell me anything I want to hear”. Nothing in life is certain. Much of this going on re: Brexit. 

The only truth is things will be different. Or not. Or good. Or bad. Or kind of ok. Or not. That is the only certainty. Pretty much like everything else really, 

it just depends on beliefs currently, which are entirely subjective, like opinions.

madmac 1 March 2018

Democracy gave the USA Trump,

Democracy gave the USA Trump, it gave the English Brexit, if you don't want to agree with democracy then move to Russia or China.Many people were fed up with Brussels telling the Brits what to do, I get that,so get over it and make the best of it, you lot!

aatbloke 1 March 2018

madmac wrote:

madmac wrote:

Democracy gave the USA Trump, it gave the English Brexit, if you don't want to agree with democracy then move to Russia or China.Many people were fed up with Brussels telling the Brits what to do, I get that,so get over it and make the best of it, you lot!

The US is a Republic and technically not a democracy. It uses a more direct form of democracy however than the UK. Democracy enables referenda to be utilised, but referenda by themselves are not democracy. They have no legal injunction in Britain and that's the case in many countries. Brussels doesn't "tell the Brits what to do." In fact a tenth of all MEPs were British and those British MEPs endorsed over 97% of all legislation proposed bgy the EU commission.

Facts - aren't they wonderful?