Further increases for UK car production, but Brexit fears linger


Car production has surged ahead, increasing by 10% over last year, but the industry has voiced concern about the impact on the business of leaving the European Union, a new report shows.

More than 158,000 vehicles were built in June, the 11th consecutive month of growth, closing the best first half of a year for 16 years.

Almost 900,000 cars were produced between January and June, up by 13% on 2015, while June's total was the highest for the month since 1998.

But the Society of Motor Manufacturers and Traders (SMMT) said a survey of its members showed that almost three out of five believed the outcome of the EU referendum would affect their business.

Chief executive Mike Hawes pointed out that almost four out of five cars built in the UK were exported, to 100 different countries, with over half going to the EU.

Almost 60% of components were imported, mainly from Europe.

"The current uncertainty about what the relationship will be in the future is playing on the minds of the industry," he said.

"The industry will do its best to manage the situation but there are worries. EU is our biggest market and the industry is concerned about a potential loss of influence on regulations, over which we will have no say."

Exports drove the latest figures, with year-to-date demand up 14.9% to almost 700,000 vehicles, compared to a 7.1% increase in the domestic market.

Carmakers and those in the components sector are most worried about the potential negative impact of tariffs or other barriers between the UK and the single market, said the SMMT.

They are also concerned about losing access to EU trade deals and losing access to skilled workers from the EU.

Mr Hawes added: "UK automotive is globally competitive with overseas demand for British made products increasing, not least in Europe which is by far our largest market. The latest increase in production output, however, is the result of investment decisions made over a number of years, well before the referendum was even a prospect.

"These decisions were based on many factors but, primarily, on tariff-free access to the single market, economic stability and record levels of productivity from a highly skilled workforce. To ensure the sector's continued growth, and with it the thousands of jobs it supports, these must be priorities in future negotiations."

Mr Hawes said car firms wanted the Government to make sure they had unfettered access to the single market as well as the ability to keep recruiting workers from other countries

"It is quite a wish list, but the key aspect is around tariffs," he added.