The Society of Motor Manufacturers and Traders (SMMT) warned on Thursday that European Union (EU) trade measures jeopardize the projected recovery of vehicle production in the UK next year.
According to SMMT data, an independent industry forecast predicts a decrease in the annual volume of vehicle production this year, after which it will rise to 752,000 units by 2027 due to the launch of new models, primarily electric vehicles (EVs).
SMMT identified three main threats to the industry's competitiveness, two of which are related to the UK's trade relations with the EU. Specifically, the European Commission's proposals for 'Made in EU' labeling could effectively exclude British cars from the EU, which is the UK's largest export market.
Furthermore, SMMT warned that stricter rules of origin, which will come into force in 2027 under the Trade and Cooperation Agreement, could lead to annual tariffs on bilateral EV trade amounting to £1.4 billion (approximately $1.9 billion).
According to SMMT, exports accounted for more than three-quarters of all UK car production in September, with 57.5% of these exported goods going to the EU. The society stated that both mentioned measures would harm the automotive industry on both sides, and called the upcoming EU-UK summit a 'vital opportunity to agree on pragmatic solutions and protect trade relations worth €80 billion (approximately $90 billion)'.
The society also warned that it views unrealistic domestic sales targets for electric vehicles as a factor creating acute pressure on manufacturers, leading to reduced profitability, resource reallocation, and weakening the attractiveness of the UK as an investment location.