The UK government must secure interim arrangements to safeguard the future of the UK motor industry and "avoid a cliff edge" during negotiations over the UK's exit from the European Union, industry group the Society of Motor Manufacturers and Traders said Tuesday.
Formal Brexit negotiations began this week, but SMMT said it believes a final, comprehensive agreement cannot be reached by the March 2019 deadline for the UK's departure from the EU.
"We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two years' time, we fall off a cliff edge -- no deal, outside the single market and customs union and trading on inferior WTO terms," said Mike Hawes, SMMT's chief executive.
This would undermine the industry's competitiveness and its ability to attract investment, he said, adding: "That's why we have to be honest with ourselves. If the UK cannot secure -- and implement -- a bespoke and comprehensive new relationship with the EU in two years' time, we need a back-up plan."
The industry is calling on the government to seek an interim arrangement whereby the UK stays within the single market and customs union until that new relationship is implemented.
The EU is by far the UK's biggest automotive export market, taking over half of its finished vehicles -- four times as many as the next-largest market, Hawes noted.
"The sector already exports to over 160 different global markets and has a consistent approach to free trade. It needs that trade to be tariff-free, as frictionless as possible to support the 'just in time' manufacturing process and with consistent regulation," he said.
The UK automotive manufacturing sector turned over a record GBP77.5 billion ($98.3 billion) in 2016, marking a seventh consecutive year of growth, while productivity, production output and vehicle sales also increased, according to figures released Tuesday by SMMT.
UK car and commercial vehicle production and new vehicle registration volumes grew to record levels in 2016, up 8.9% and 0.2%, respectively, year on year -- 73 million cars and 93,924 commercial vehicles were produced and 2.69 million cars and 430,694 commercial vehicles were registered in the UK in 2016.
"For UK auto manufacturing to continue to thrive, we need clarity on the future, post-Brexit, to encourage ongoing investment and growth," said Hawes.
