This week’s LCV registration figures are a small ray of light across our current sea of troubles. Volumes are up more than 7% on July last year, although unsurprisingly we are still substantially down year–to–date. Nevertheless, it is a potentially positive sign, supporting confidence within the industry that we’ve not seen for some time. There are even some body builders and converters out there with full order books.
However, we must remain cautious when the economy remains so uncertain for reasons beyond Covid-19. SMMT already predicts that total LCV registrations 2020 will drop by more than 25% compared with last year. And with Free Trade Agreement negotiations between the UK and the EU reaching a critical point, this and a broader UK recovery could be undermined by a bad deal. The automotive sector is a significant contributor to the UK economy, generating more than £100 billion worth of trade in 2019. The LCV sector is particularly dependent on free trade with the EU. Last year, 94.6% of our LCV exports were to the EU, and more than 95% of new LCVs registered in the UK were imported from the EU.
We need a deal that ensures all automotive products are free of tariffs with tailored rules of origin provisions. Both parties must negotiate a new framework for regulatory cooperation and dialogue, minimal delays and disruption on both sides of the border and the ability to move our people freely and easily between sites in the UK and the EU.
The commercial vehicle sector has managed itself well over the last few months and, with the right conditions, has a bright future. But a successful long-term recovery will be dependent on securing and implementing a truly tariff free FTA by the end of the Transition Period.
