SMMT says UK automotive has spent £735m preparing for Brexit and would lose much more without right deal
The Society of Motor Manufacturers and Traders (SMMT) has issued a final plea for the UK government to reach a tariff-free trade deal with the European Union as final Brexit negotiations take place.
The industry body claims that, as a whole, the UK’s automotive sector has spent more than £735 million in preparing for the UK’s long-delayed departure from the EU, £235 million of which in 2020 alone.
It adds that, despite 67% of UK automotive companies taking steps to prepare for new customs processes that will come into effect on 1 January, some 86% remain hampered by a lack of clarity regarding the UK’s future relationship with the EU.
It adds that 60% of companies are “spending significantly on stockpiling and 52% are employing customs agents”.
The SMMT reiterates, as it has done several times before, that the industry’s just-in-time business model is dependent on swift customs processes and minimal delays. It has called on the government to shed light on the terms of the Goods Vehicle Movement Service (GVMS) and Permission to Progress (P2P) processes so that businesses can factor them into revised delivery models.
A no-deal Brexit would cost the UK automotive sector up to £47 billion in lost trade over the next five years, according to the SMMT. The possibility of prohibitive tariffs being introduced without a phase-in period would “compound the impact of the coronavirus crisis – itself already costing the UK sector some £27.5bn in lost car production and sales”.
SMMT chief executive Mike Hawes said: “As the UK-EU FTA negotiations enter the endgame, now is the time for both sides to deliver on promises to safeguard the automotive industry. Securing a deal is absolutely critical, but it can’t be any deal.
“To work for UK automotive, it must deliver for UK products, and that means securing the right terms and conditions that allow our exports – now and in the future – to be zero-tariff and zero-quota trade.
“A deal that failed to achieve this would be the equivalent to no deal at all, devastating jobs and slamming the brakes on the UK’s ambitions to be a world-leading manufacturer and market for electrified mobility and battery technologies.”
The SMMT has called on the government for action in 10 key areas ahead of the departure date, which are:
– A temporary grace period for exporters of at least one year to obtain supplier declarations.- Clarity on the format of the upcoming origin declarations and the necessary supporting documents and IT processes.- Certainty on preferential origin formalities for export to the UK’s other FTA trading partners.- Guidance on valuation and origin of used products, or ‘cores’, imported into the UK for remanufacturing purposes.- Detail on the Permission to Progress (P2P) process and Goods Vehicle Movement Service (GVMS) to mitigate the risks to just-in-time manufacturing. If there’s substantial time between a company submitting a customs declaration and receiving a P2P, there’s a risk the manufacturing site becomes a lorry park and production gets significantly disrupted.- Draft legislation on how UK government will handle returnables/stillages/empty packaging that was committed to back in April 2020.- Support in connecting with third-party customs intermediaries.- Extend access to the £84m customs funding to all traders to boost their customs capacity and preparedness.- Publish a full list of ports and which operating model they will use as a matter of urgency.- Significantly more operational level information from government on the workings of the Northern Ireland Protocol.