Carmakers fear rising trade barriers after Brexit

Carmakers fear rising trade barriers after Brexit

A storm is brewing as clouds gather over Bristol Port, with the rain set to fall on tens of thousands of vehicles parked in the port’s car compounds, ready for export by ship, or destined for UK dealerships. It is an apt backdrop for the UK automotive sector’s current predicament.

“Brexit has derailed the industry,” says Sarwant Singh, senior partner and global head of automotive and transportation at consultants Frost & Sullivan. “The uncertainty causes people not to buy cars.” The number of cars sold in the UK dropped 5.7% in 2017, according to industry body the Society of Motor Manufacturers & Traders, and ratings agency Moody’s predicts a further 5.5% fall this year.

There has been little respite from foreign markets, with exports slipping 1% last year.

Each year, about 80% of the vehicles built in the UK are exported, so smooth international trade relations are vital for the automotive sector’s continued prosperity. But these days, the relations are as choppy as the sea in the Bristol Channel. Industry executives’ main fear is that Brexit will result in heightened barriers to trade, not only with the European Union, but with the rest of the world too, once the transition period ends on 31 December 2020.

The prospect of an escalating trade dispute between the US and its main trading partners, the EU and China, also looms large, after US President Donald Trump’s recent threat to tax cars imported into the world’s largest market. “All of Europe is exposed,” says Justin Cox, director of global production at consultants LMC Automotive, “but some plants are more exposed than others, and it so happens that several of those are in the UK.” Then there’s China, the world’s second-largest car market. Trading relations with China are already complicated, and may well be subject to even greater complexity in future.

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