The Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes released a statement predicting there would be less investment in the UK car industry in the next three years. The decrease in investment stems out from the uncertainties brought about by the Brexit aftermath.
Hawes told the Treasury Committee that they are currently collating data for analysis. However, although they are still in the process of data gathering, he can already sense that they could no longer expect an increase or even an equal amount of investment to come in for this year compared to last year.
As per records of SMMT, about 2.7 million new car registrations were enlisted last year, Autoexpress has cited. In addition, the car industry made a milestone of producing 1.7 million vehicles last year, which is the highest output since 1999, Financial Times has noted.
Moving forward, the car industry might not achieve a similar success this year. According to Hawes, automakers are less confident to invest in the future trade agreements will have greater clarity.
Currently, there is no tariff for automakers on EU trade. However, if the Brexit negotiation period will result to a zero trade, cars which will be sold to the EU will then face a 10 percent tariff to comply with the rules of the World Trade Organization.
(1/3) Post #Brexit a UK-German deal would include free access for their cars and industrial goods, in exchange for a deal on everything else
— David Davis MP (@DavidDavisMP) May 26, 2016
Hawes explained that the automakers will have difficulty to cover the additional cost of 10 percent tariff. This could further result in factories shutting down, although it was also mentioned that it may take some time to reach this worst scenario.
Furthermore, the head of automotive at Lloyds Bank, Stuart Apperley, has also released a statement confirming the potential freezing of investments. Apperley said that it is possible that investments will be put on hold as the Brexit uncertainty continues to prevail. No major decision can be done on investments unless the future becomes clearer for the UK automotive industry.
See Now: OnePlus 6: How Different Will It Be From OnePlus 5?
