UK car production could be cut by more than a third if the UK withdraws from the EU without an “ambitious” trade deal, an industry body has warned.
Analysis commissioned by the Society of Motor Manufacturers and Traders (SMMT) predicts that falling back on World Trade Organisation (WTO) rules would add £3.2bn a year to car making costs.
Car prices would rise and annual output could fall to as little as one million by 2024, the data by AutoAnalysis said.
The UK made 1.52 million cars in 2018.
SMMT chief executive Mike Hawes said falling back on WTO rules for imported components and car exports would result in a level of cost increases that the industry would not be able to absorb without prices rises and production cuts.
He used the body’s annual dinner on Tuesday to call for an “ambitious, world-beating Brexit trade deal to maintain the sector’s competitiveness and ability to deliver innovation, productivity and prosperity for Britain”.
Mr Hawes said the industry needs “frictionless trade free of tariffs, with regulatory alignment and continued access to talent”.
He went on: “A close trading relationship is essential to unlock investment so we can deliver our goals: cleaner air, zero carbon emissions, and the ability to go on building our products and marketing them globally.
“Rather than producing two million cars a year by 2020, a no trade deal, WTO tariff worst case scenario could see us making just a million,” he said. He predicted that production of new models that would have been made in the UK could be moved “to more competitive and welcoming production locations”.
UK car manufacturing has already seen its weakest first nine months of a year since 2011, falling by 15.6% year-on-year. Honda and Ford have announced plant closures this year but both blamed factors other than Brexit.
Peugeot has said a decision to keep open its Vauxhall car factory in the UK is dependent on the final terms of Brexit.
Mr Hawes said automotive was one of the UK’s most valuable economic assets, directly responsible for putting food on the tables of 168,000 British workers and their families.
“The next government must deliver the ambition, the competitive business environment and the commitment needed to keep automotive in Britain,” he said.