If UK exits the European Union, the automotive industry may face massive export tariffs that could lower makers’ earnings, SMMT said.
The Brexit referendum is coming within a month and the perspective of a supportive vote for a British exit from the European Union worries the country’s automotive industry, a sector which relies on strong demand from the overseas markets. If UK decides on June 23to leave the block, exports to the EU could draw a 10 percent tax or up to 100 billion dollars, Michael Hawes, CEO the Society of Motor Manufacturers and Traders, said, while adding the components companies may face a 2.5 percent tariff. For the first four months of 2016, UK car production jumped nearly 11 percent, to 588,024 units, with exports to the UE accounting for 60 percent of the total car output.
According to a survey on the matter conducted earlier this year, 77 percent of SMMT members said remaining in Europe would be best for their business. Only 9 percent said they were in favour, but mostly rather small suppliers and manufacturers.
UK is the host of some of the world’s biggest part makers, with Britain having the ability to make locally 80 percent of the components. There are also some major automakers with car facilities in the country, Nissan being one of them. The Japanese automaker was the biggest producer on the local auto industry in the UK until last year, when it was overpassed by Jaguar Land Rover. In 2015, it built more than 475,000 vehicles, 80 percent of which are exported. Mini, Rolls-Royce, Bentley, Toyota and Honda also build cars in the UK.