Investment in UK car industry halves as Brexit uncertainty bites

New figures released weeks after CBI warned motor sector faces 'extinction' if Britain leaves customs union

Investment in the UK motor industry has halved in the first half of 2018, as uncertainty about the future post-Brexit hits spending, according to the latest research from the Society of Motor Manufacturers and Traders (SMMT).

Turnover in automotive manufacturing increased by 5.3 per cent last year, and jobs in the sector rose 2.8 per cent to 186,000.

Meanwhile, the industry’s green credentials improved, with CO2 emissions per vehicle falling by 9.4 per cent and waste to landfill reducing by 12.6 per cent.

However, in the first six months of this year, the SMMT reported that investment has stalled, with just £347.3m earmarked for new models, equipment and facilities in the UK – around half the sum announced in the same period last year.

Production output has fallen, due to slowing demand in the new vehicle market, and hundreds of job cuts have been announced, including at Jaguar Land Rover and at Vauxhall dealerships across the UK.

The SMMT said the government “must take steps to boost investor confidence and safeguard the thousands of jobs that depend on the sector”.

The group called on the government to end uncertainty about the UK’s future trading relationship with the EU, and “commit to continued membership of the customs union and maintenance of the benefits the single market delivers”, or risk undermining the competitiveness of the UK car industry.

Mike Hawes, SMMT chief executive, said: “There is growing frustration in global boardrooms at the slow pace of negotiations. The current position, with conflicting messages and red lines goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership.”

Mr Hawes said there was “no credible ‘plan B’ for frictionless customs arrangements”, and that it was unrealistic to expect that new trade deals could be agreed with the rest of the world that would replicate the immense value of trade with the EU.

“There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment,” he added.

“Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it.”

The SMMT’s call for action comes weeks after Paul Dreschler, president of the CBI, warned that the UK’s motor industry faces “extinction” if Britain leaves the EU customs union.

“If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct,” he said. “Be in no doubt, that is the reality. There’s zero evidence that independent trade deals will provide any economic benefit to the UK that’s material. It’s a myth.”

Meanwhile, Donald Trump recently threatened to impose 20 per cent tariffs on European cars as retaliation for the EU’s “unfair” treatment of American goods.

“Based on the tariffs and trade barriers long placed on the US and it great companies and workers by the European Union, if these tariffs and barriers are not soon broken down and removed, we will be placing a 20 per cent tariff on all of their cars coming into the US. Build them here!” Mr Trump said in a statement posted on social media.