UK customers may face a 1,500 pound ($1,974) increase in prices for cars from the EU member states, if London and Brussels fail to agree on Brexit conditions during their ongoing negotiations, while the average cost of a UK-produced car could go up by 2,700 pounds for EU buyers, UK Society of Motor Manufacturers and Traders (SMMT) said on Wednesday.
"New SMMT analysis suggests that no-deal and the resulting tariffs on light vehicles alone would add £5 billion to the collective EU-UK auto trade bill. If passed directly on to consumers, import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700, and that of light commercial vehicles by £2,000 – affecting demand, profitability and jobs. Similarly, UK buyers of a car or van from the EU would be faced with £1,500 and £1,700 increases if manufacturers and their dealer networks were unable to absorb these additional costs," the body said in a statement on the SMMT's website.
According to SMMT Chief Executive Mike Hawes, a no-deal Brexit could result in "far higher" stakes for the sector and the tariffs alone "should be enough to focus minds on sealing a withdrawal agreement between the EU and UK but the potential impact of ‘no-deal’ means the stakes for the automotive sector are far higher."
"Without a deal, there can be no transition period and the complex issues surrounding tariffs and trade, customs, regulation and access to talent will remain unresolved," Hawes added.
He went on to call on the negotiating parties to "act swiftly to avoid disruption and damage" to the automotive industry, which he qualified as one of the "most valuable shared economic assets" of the United Kingdom and the European Union.
The SMMT expressed its concerns over the possibility of a no-deal scenario, and called on the two sides to promote a "managed withdrawal and 'status quo' transition."
The EU automotive sector employs over 13 million of people and accounts for 6.8 percent of the bloc's GDP. The United Kingdom is the European Union's second largest car market, with both parties collectively importing and exporting 2.7 million cars annually.
The UK automotive sector employs 186,000 people, and a no-deal scenario, which could put these jobs at risk, "cannot be an option," according to the SMMT.
In June 2016, the United Kingdom voted to leave the European Union. Although Brexit is scheduled for March 29, 2019, London and Brussels still cannot agree on a number of key issues, including the Irish border and the customs arrangements, making a no-deal scenario a possibility.
On September 10, EU chief Brexit negotiator Michel Barnier said that agreements could be finalized in late October or the beginning of November.