The Society of Motor Manufacturers and Traders (SMMT) has repeated its warning on the risks of a no-deal Brexit to the UK car industry, after figures revealed that investment in the sector nearly halved in 2018.
Fresh inward investment in the automotive sector was down almost half (-46.5%) on 2017 to £588.6m. The SMMT placed blame for the decline over uncertainty with the UK’s future trading prospects with the EU limiting investment last year.
UK car production fell 9.1%, a five year low. Output for the UK dropped 16.3% and international exports fell 7.3%, which the SMMT said was due to regulatory changes and ongoing uncertainty over future diesel policy and taxation, exacerbated by declining consumer and business confidence.
Exports for overseas markets dropped -7.3% as slowdowns in European and Asian markets took effect. UK car exports to China slumped -24.5%, while EU demand fell by -9.6%, while registrations of British-built cars in the UK down -20.9% in the year. Overall, EU27 countries still accounted for the majority of UK exports (52.6%), amounting to 650,628 cars. Exports to Japan rose 26.0% and South Korea also showed growth, of 23.5%.
Mike Hawes, SMMT chief executive, said, “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs. Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.
“Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal’.”
Yearly data from the SMMT showed also 6.8% drop in new car registrations in 2018, showing decline for the second consecutive year.
Seán Kemple, director of sales at Close Brothers Motor Finance, said: “Brexit is continuing to damage output, sales and jobs in the UK automotive industry, a reality confirmed with latest SMMT manufacturing figures showing that investment in the British car industry dropped by almost half in 2018.
“Brexit is having an impact on consumer and dealer confidence, with 35% of dealers seeing it as the biggest threat to their business, according to our research. There is hope to be had, and dealers remain confident about the future of their businesses, but investment in this vital sector must remain a priority.”