CEO Update

Cause for optimism in 2021

08 January 2021 #CEO Update

We asked for a Brexit deal by Christmas and, on Christmas Eve, the negotiators finally delivered. With the deal ratified by parliament with just hours to spare, it’s fair to say the sector breathed a collective sigh of relief. The UK-EU Trade and Cooperation Agreement (TCA) finally offers some certainty on our future trading relationship with the EU after a long four and a half years since the referendum.

Keeping automotive competitive was our top priority during the UK-EU trade negotiations. We lobbied hard to avoid ‘no deal’ and, whilst by no means a substitute for the benefits we formerly enjoyed with the EU, the TCA does address our immediate concerns by providing an opportunity for tariff and quota-free trade with our largest export market, and therefore foundations on which to build.

SMMT remains on hand to support members in navigating the challenges of adjusting to new trading rules. Our dedicated online Brexit transition hub contains the latest information related to the changes that came into force on 1 January and the actions businesses need to take to comply. We will be regularly updating the hub so I would encourage you to keep checking it for the latest guidance.

The first week of the year brought with it new car and van market performance data for 2020. Unsurprisingly, registrations in the year saw a steep decline, with 1.63 million cars registered marking it the lowest level of demand since 1992. Van registrations performed better but still suffered a 20% drop. In both sectors market demand was undermined by the coronavirus pandemic, prolonged Brexit uncertainty and an acceleration of the end of sale date for petrol and diesel cars and vans to 2030. There was, however, some good news as zero emission-capable cars accounted for one in 10 registrations, up from around one in 30 in 2019 and, with many new models on the way in 2021, market growth is set to continue, helping meet our shared environmental ambitions.

SMMT also participated in a business roundtable with the Prime Minister, Chancellor of the Exchequer, Secretary of State for Business and Trade Secretary, and we welcome their commitment to supporting the automotive industry as we all seek to recover from the damage Covid has wrought. During these talks, the Prime Minister thanked the sector for its commitment towards net zero as well as its engagement and perseverance on Brexit. Given the last minute interventions the UK Government made during the Brexit negotiations to try and secure additional concessions on our behalf, the importance of the sector to Government and the economy remains well understood and fundamental to its long term environmental and economic ambitions.

Whilst we find ourselves in a third national lockdown – during which SMMT will continue to provide support and guidance via our online Covid-19 hub – we need to look towards 2021 with a degree of optimism. The rollout of vaccines, Brexit certainty and the promise of a renewed industrial strategy puts recovery within our sights even if it may still appear distant. Our immediate challenge is to get Covid-secure showrooms open as soon as possible as that is essential not just to the retail sector and individual mobility, but also to the continued operation of our production lines. Manufacturing and retail remain inextricably linked.

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