UK car industry faces 13% rise in costs after Brexit

Manufacturing costs for new cars could rise by as much as 13 percent even if the UK achieves a tariff-free deal with the European Union post-Brexit, leaked Government documents have suggested.

A sample of the Government’s internal Brexit impact assessment across a variety of sectors, obtained by Sky News, suggests new ‘motor vehicle’ manufacturing costs could rise between five and 13 per cent just as a result of non-tariff costs that would be generated.

Best-selling cars in the UK 2018

Non-tariff barriers include other forms of trade restrictions and limitations such as possible import quotas, customs and border delays, checks on standardisation of parts and administrative fees that could be introduced on goods imported and exported out of the UK.

Every day, more than 1,100 trucks for UK car plants cross into the UK from the EU – the vast majority without being checked at customs – delivering approximately £35 million worth of components, according to figures from the Society of Motor Manufacturers and Traders (SMMT). The same UK plants build around 6,600 cars and 9,800 engines – the bulk of which are then shipped back to the EU.

Motor industry calls for ‘frictionless’ Brexit

The Government’s calculations essentially represent the friction that UK’s manufacturing sectors could experience once the country leaves the EU trading bloc – from potential border delays, to greater scrutiny over standardisation of parts. The SMMT’s previous research has also shown that trade tariffs and non-trade barriers could hike average new vehicle prices by £1,500 if the UK were to fall back to World Trade Organisation trading rules with other surveys putting that figure even higher.

A Government spokesperson told Sky News: “This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations.”

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