The UK car sector has issued a fresh plea for Brexit trade clarity, warning that “growth is stalling” with long-term production targets and investment at risk.
The Society of Motor Manufacturers and Traders (SMMT) said manufacturing output was 13.7% down in June compared to a year ago when voters were casting their votes in the referendum.
That followed falls in the previous two months – blamed on the timing of Easter and readying production for new models.
It reported on Thursday that June’s reduction meant total output in the first half of the year was down almost 3%.
It was, the SMMT said, largely expected following a period of strong sales growth aided by the availability of cheap car finance.
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But the industry body pointed to a drop of almost 10% in domestic demand, as consumers face higher Brexit-linked cost pressures.
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Exports, it said, were still driving production with the number of UK-made cars being shipped overseas hitting a five-year high in percentage terms.
The SMMT highlighted growth in uncertainty among carmakers.
It has campaigned vigorously for tariff-free trade after the UK leaves the EU, fearing manufacturers will drive off for the continent if the UK’s largest export market is more competitive.
It said that while factory output was predicted to pick up in the second half of the year as new models came on line, this was now less certain.
It also pointed to the findings of a report for the industry which predicted targets for 2020 would now fall shy of estimates, though each scenario included the expectation of trade tariffs.
The downbeat note was issued just days after some welcome news, with BMW confirming plans to build electric Minis at its Cowley plant outside Oxford from 2019 – the year the UK is slated to leave the EU.
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The Government and the company insisted there were no sweetheart deals to secure the investment.
SMMT chief executive, Mike Hawes, said clarity for all was now needed after a “turbulent” year for the sector.
He said: “World-class engineering, productivity, strong government collaboration and massive investment in the past few years have helped UK automotive become a global success story.
“At the heart of this has been the free and frictionless trade we’ve enjoyed with the EU, by far our biggest customer and supplier, but Brexit uncertainty is not helping investment and growth is stalling.
“The Government has been in ‘listening’ mode but now it must put on the table the concrete plans that will assure the future competitiveness of the sector.
“Investors need certainty so, at the very least, the UK must seek an interim deal which maintains single market and customs union membership until we have in place the complex new agreement sought with the EU.”
A spokesperson for the Department for Exiting the European Union said: “The UK’s automotive industry is world leading and the Government’s Industrial Strategy makes clear that we want to build on our strengths in advanced manufacturing in this sector.
“Nissan’s decision to continue its investment in Sunderland and plans by Jaguar Land Rover to double its output here are clear votes of confidence in our automotive industry.
“We are determined to ensure that the UK continues to be one of the most competitive locations in the world for investment in automotive manufacturing.”