CEO Update

A deal with the EU can help reboot production

30 October 2020 #CEO Update

It has been a year of unprecedented challenge for the automotive sector, and as a second wave of coronavirus sweeps across Europe, this week has seen more regions in the UK move into Tier 3 restrictions, with more likely to follow in the future, as well as partial national lockdowns announced in France and Germany.

While the industry has demonstrated incredible resilience in the face of the pandemic, including turning facilities over to ventilator and PPE production earlier this year, automotive businesses remain fragile. The damage, however, is evident. Car production in September fell by -5.0%, the worst September since 1995.

A 2021 recovery is hard to foresee from the bleak position in which we currently find ourselves and is far from guaranteed. But what is assured is that the industry cannot cope with the effects of the pandemic and the blow of a ‘no deal’ Brexit. This is why we continue to call on the government to negotiate an FTA with the EU – one that works for the automotive sector and which will secure our future overseas trading relationship with our largest trading partners. This would provide a much-needed boost to everyone’s confidence and is a necessity if the industry is to survive.

With the end of transition period fast approaching, it’s a relief that both sides have now reconvened talks. Automotive must be prioritised in these discussions, not traded off for other sectors or political positioning. We need that deal urgently – to safeguard the industry, its creativity and innovation without which any hopes of meeting shared environmental ambitions will falter.

In the meantime, the UK is still to leave the single market and customs union at the end of the year and SMMT remains committed to supporting our members’ preparedness for the end of the transition period, deal or no deal. As part of this, on Tuesday 3 November at 15:00, we will be hosting a webinar on rules of origin.

This webinar will walk you through the UK’s Global Tariff schedule which comes into effect from 1 January 2021. Our experts will explain how it differs from the EU’s Common External Tariff, what is meant by ‘proving origin’ and detail the documentation companies will need to complete for moving goods between the UK and EU. To register, please click here.

Beyond the EU, SMMT is also committed to supporting its members in other markets. To that end, SMMT and a delegation of UK companies this week took part in a UK-Korea Connected and Autonomous Mobility conference, aimed at highlighting the UK’s capability as a centre of testing and development for connected and autonomous vehicles. The UK’s advantage is in both our technical capability and our openness and accessibility to international partners. If you, or your company, are looking to do business in South Korea or explore any other market, contact our international team.

Meanwhile, next week the world will watch in anticipation as the US holds the 2020 Presidential election. Whoever is successful, we hope the new presidency will back free trade and shared ambitions. The industry is a valuable asset on both sides of the Atlantic. The threats, however, are coming thick and fast so we need to act in concert to meet these challenges for the betterment of economies, societies and the environment.