The green light for negotiations on future UK-EU trade is a pivotal moment for the automotive industry. The UK sector trades globally, but much of it is integrated into the European industry.
Free trade without borders and a growing market provided the foundations from which the sector rebuilt from the decline of the 1970s and 1980s to regain its reputation as a global powerhouse – growing the UK economy in the process.
Automotive production is a key driver of prosperity in Britain, contributing £18.6bn annually and helping balance the economy by creating wealth across the country. One in 14 manufacturing employees works in an automotive factory, with salaries typically 21 per cent higher than the national average. In regions such as the northeast and west midlands, the industry represents more than one in six manufacturing jobs.
Brexit aside, this is a moment of dramatic change, as the sector reshapes how vehicles are designed, built and driven, and creates new propulsion systems to drive emissions down to zero. It will see more transformation in the next 10 years than the past 50; the UK, with its high productivity, skilled workforce, and research and engineering expertise, is well-placed to capitalise on that change.
The sector is, however, highly competitive internationally and with fine margins. To thrive, we need the right business environment.
The automotive industry delivers more for the UK when it has the support of government – just look at the growth driven by our joint industrial strategy. For the future, this will mean supporting the transition to zero emissions by increasing consumer incentives and securing a battery gigafactory to help retain a globally advanced supply chain.
It also means creating a competitive framework for business rates, capital allowances and research and development (R&D) incentives; creating the right digital, energy and transport infrastructure; and fostering the talent to keep the UK ahead in the global technology race.
Above all, we must ensure the sector continues to benefit from free trade with our biggest market, the EU, as well as maintaining preferential access to markets worldwide.
The sector is export-driven, trading globally. Go to China, the US, Japan, Mexico or Brazil and you will find the best of British vehicles on the roads. The starting point must be to secure an ambitious UK-EU free trade agreement that guarantees all automotive products can be bought and sold without tariffs, delays or other barriers that add cost and reduce market access.
This won’t be easy, but our industry is certainly up for the challenge. We are committed to helping our government secure a world-class free trade agreement that will restore our reputation as a great place to do business – because, in short, when the automotive industry wins, so does the UK.
Mike Hawes is chief executive of the Society of Motor Manufacturers and Traders
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