The car industry is beginning to sound the alarm loud and clear. The industry's trade body, the Society of Motor Manufacturers and Traders (SMMT) warns the government is putting 860,000 jobs at risk and says "at a minimum" we need to stay in the customs union as well as securing a deal that includes all the single market benefits (HERE). This isn't the first time the SMMT has issued warnings and it remains to be seen if it has any more effect than previous ones.
On the same day, the BBC have an interview with Mike Hawes, CEO of the SMMT who says, among other things, that investment in the car industry has fallen by nearly half (HERE). This is tomorrow's lost output or falling productivity. He told the BBC that the industry needed "clarity" and demanded that Britain stay within the customs union and that a "no deal" scenario - where the UK leaves the customs union and the single market with no preferential trading deal - would be "the worse option imaginable".
And behind a pay wall, in an interview with the FT (HERE) Honda talk about the problems of replacing the just-in-time model, which wouldn't work outside the customs union and the single market:
"To a car industry famed for its clockwork tempo, the potential delays pose an existential challenge. A warehouse capable of holding nine days’ worth of Honda stock would need to be roughly 300,000 sq m — one of the largest buildings on earth. Its floorspace would be equivalent to 42 football pitches, almost three times Amazon’s main US distribution centre. And its cost to operate would be as eye-catching as its proportions."
And this:
“It is the end of the business model,” says one senior EU diplomat handling Brexit who has met car executives laying out the dire consequences for their industry. “It is nuts.”
We are nine months away from the cliff edge disaster and we see MPs and ministers telling us we've agreed a 21 month transition, but this is not yet formally settled because it's part of the withdrawal agreement - and it looks less likely by the day. Even if we manage somehow to reach an agreement, the trade element will only be political not legal. Car makers won't know for certain whether we will remain in the CU and the SM until a trade agreement is signed and ratified. So more uncertainty and less investment for years potentially.
Note: If the link to the FT story doesn't work Google "Carmakers warn of the real cost of Brexit" and click on the result.
