CEO Update

Why the ‘no deal’ threat remains a danger

01 November 2019 #CEO Update

Sadly, there’s little surprise that this month’s manufacturing figures are again bad news, thanks to ongoing domestic and international market contraction. There is also, of course, the continuing uncertainty over Brexit and the consequent political and economic anxiety, which has undermined business and consumer confidence. Global investors have taken fright – the mere threat of a ‘no deal’ Brexit has meant that inward investment in UK Automotive has stalled, and hundreds of millions of pounds have had to be spent on Brexit mitigation that could have otherwise gone to help meet the technological challenges facing the industry.

The automotive sector craves stability, so there could have been some light at the end of the tunnel when parliament passed the second reading of the draft Withdrawal Agreement Bill. But that has now been shelved as the UK goes to the polls for a December general election which may ultimately provide some clarity, if not certainty. But make no mistake, that threat of a ‘no deal’ Brexit on 31 January remains very real, and indeed we will continue to face a rolling cliff-edge at the end of the transition period as the UK and EU enter detailed negotiations over the terms of a future trading relationship. We will not dilute our ambition when it comes to that future with the EU, however. We need to set about agreeing a post-Brexit relationship that safeguards the free and frictionless foundation on which our industry has been built, that gives us the ability to replicate other preferential trade agreements with no divergence in regulation.

The draft withdrawal agreement contains a transition period, but that expires on 31 December 2020 – barely a year after a new government will be elected and in international trade terms a blink of an eye in which to sign a deal. Until we agree and implement that new legal trading relationship, ‘no deal’ remains a possibility. The clock is still ticking. UK industry’s prospects will continue to be inhibited until we get that deal done and it must be ambitious, permanent and safeguard free and frictionless trade. Only then can we return our full focus to the numerous major challenges we all face, including driving the future mobility agenda and addressing climate change goals. The government has set ambitious targets to reduce emissions to net zero by 2050, which means that consistent long-term policymaking should be a priority, with a technology-neutral, national approach that helps avoid consumer confusion over what to buy.

The best way to reduce emissions on our roads is to incentivise uptake of the latest low, ultra low and zero emission vehicles, including Euro 6 petrol and diesels, which are the cleanest ever produced. As the diversity of technological options for consumers increases, we need to ensure they are informed and confident in the purchase of the cleanest vehicle that’s right for their individual needs. We need to accelerate that shift and get these advanced technologies filtering into the used car market more quickly. Industry has invested billions in bringing these vehicles to market and is committed to helping improve our environment, but it needs a return on that investment by increasing sales if further developments are to be funded.

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