SMMT: Car industry should be “at heart of UK trade policy”

SMMT report

Industry analysis claims that UK car exports bring in £27 billion, despite effects of pandemic

The Society of Motor Manufacturers and Traders (SMMT) has called for the UK’s automotive industry to be placed at the heart of future trade deals, after publishing a report highlighting its importance to the export market.

Vehicle exports brought in £27 billion in 2020, despite the effects of the pandemic, the most of any exported commodity by value.

The automotive industry as a whole returned £74bn of combined trade last year, shy of the £100bn that would’ve been expected without the disruption caused by Covid-19.

The SMMT’s report – titled Driving Global Britain – also highlights the importance of trade with the European Union. Around half of all cars and nearly all vans made in the UK are exported to the EU’s 27 member states, while 78.1% of cars on UK roads come from the EU. 

“As the world re-emerges from the pandemic, the diversity and importance of Britain’s automotive industry is the UK’s competitive advantage for restarting growth, creating jobs and tackling climate change,” said SMMT chief executive Mike Hawes.

“With automotive at the heart of future trade policy and negotiations focused on removing both the tariff and non-tariff barriers that stifle growth, we can drive forward the growth of global Britain and sustain our place as an economic, industrial and environmental leader.”

Asian and Eastern European markets are expected to grow rapidly over the next few years, and the SMMT wants dedicated automotive annexes written into future trade agreements to reduce tariffs and remove regulatory barriers.

However, Hawes admitted that deals with the US and China – the UK’s second- and third-largest export markets respectively – remain “unlikely” without fresh political will.

The report marks the SMMT’s first Global Trade Conference and comes at a time when the automotive industry is facing pressure on several fronts. The pandemic, the global semiconductor chip shortage, additional costs to supply chains as a result of Brexit and the UK government’s commitment to ban new petrol and diesel vehicle sales from 2030 have all contributed in some form over the last 18 months.

Several companies are actively showing an interest in the UK as both a manufacturing base and as a market, Hawes claimed, but rising energy costs (now among the highest in Europe) and business rates could potentially prohibit investment.

Manufacturers also agree that the UK needs to deliver around 60-90GWh of domestic EV battery production by the end of the decade in order to remain competitive.

The UK lost out to Germany as a base for Tesla’s first European factory, but Britishvolt is one of a group of firms still pursuing a so-called gigafactory on British soil.

The SMMT recommends that future rules of origin be reworked to ensure that “the vast majority of automotive products could avoid paying tariffs”.

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