This isn’t to suggest that the industry’s problems are solely due to Brexit. The German industry is also suffering, a lot of it down to the lacklustre take up of EVs and Europe’s late conversion to electric vehicles. But having said that, Brexit is unique to Britain.
Way back in October 2018, I wrote a post on this blog about the economist Patrick Minford and his evidence before a parliamentary select committee in 2012 concerning the UK car industry, long before Brexit. Minford, as you probably know, was and is a keen supporter of leaving the EU. He’s one of the few economists who thought the country would be better off out. He claimed at one point in November 2015 that Brexit would result in an 8% fall in the cost of living on day one. How wrong can you be?
This is what he said:
"If, for some reason, there were no willingness by the other countries’ car owners and governments to co-operate in this [agreeing a ten year transition] and there were a faster run-down of our car industry as a result of that lack of co-operation, we would have to compensate them in a way rather like the steel and coal industry. Those were not economic industries. That is a quite good parallel. If you have an industry that is not economic, it is your interests to run it down. Obviously, it would be nice if others would co-operate in parallel in the run-down so that it puts less of a cost on you but if, in the end, you have to do it yourself, you are still better off."
So, on the car industry, he has been proved right. The announcement this week by Stellantis is another nail in the coffin. To be fair, Brexit wasn’t mentioned directly and the decision was made based on issues with EV sales apparently.
But this didn't stop Mark Noble, a former boss of Luton saying the factory’s "troubles began with Brexit", and I think this is undeniable. It was always going to be the case. And as usual, the weakest are impacted first. It’s hard to argue he’s wrong. Disconnecting yourself from the huge European market was always going to be bad, it’s blindingly obvious.
Mr Noble claimed successive governments had "no plan" to help car manufacturers match supply with demand.
"There's no incentives offered by the previous [Conservative] government or this [Labour] government to buy an electric vehicle. I think we are the only Western European country to not incentivise buying an EV or installing a charger," he said.
He also said that cheap EV imports from China - subsidised by its government - were also a threat.
"You have to look at Australia – there is no Australian car industry now. They didn't put tariffs on the Chinese cars - you need tariffs on imports to make it an even playing field."
The EU announced tariffs of up to 35% on imported Chinese EVs on 30 October this year. We have no plans to do the same. Good for consumers perhaps but terrible for the UK industry.
Andrew Graves, a professor at the University of Bath with over 50 years’ experience in the UK car industry, told the Independent that the long-running problem is Brexit: “If you’re not in the EU, you’re at a major disadvantage,” he said, highlighting how quitting the EU has added extra expense and red tape in importing and exporting cars and parts.
What I hadn’t noticed is the huge fall in output in our car industry. In 2022, we produced just 775,014 cars during 2022, the lowest annual figure since 1956. Production fell 9.8% from 2021, and declined a massive 41% from 2019. According to the Society of Motor Manufacturers and Traders (SMMT) in the year to date, we managed a pitiful 522,823 a fall of 8.5% on the previous 12 months and almost exactly the same as we produced in 1950!!
To be sure about the numbers I looked at Wikipedia's page on the British car industry and a chart shows they're correct. In 2016 we manufactured 1,722,000 vehicles (excluding vans) in this country, a figure that had been rising steadily since the financial crisis of 2010. Before that the absolute record was in 1998 and 1999 when we hit 1,748,000 and 1,787,000. All done inside the EU.
Since 2016 output has fallen every year until we are back at 1950 levels.
And with China overtaking Germany as the world's largest exporter of cars, the UK refusing to protect its ailing industry, I can't see the trend changing anytime soon. What a disaster.
