(Bloomberg) -- A so-called Brexit without a trade deal between the U.K. and the European Union could cost the car industry and consumers at least 5.7 billion euros ($6.7 billion) a year in vehicle tariffs, according to a report by a British industry group.
The Society of Motor Manufacturers and Traders said Wednesday the estimate is based on levies of 10 percent on cars exports and imports from an industry that could also suffer production halts due to the split.
“Brexit is the major challenge that we have,” Mike Hawes, head of the SMMT told reporters in Brussels. “What we need to insure is that come November there is a withdrawal agreement because we cannot afford no-deal Brexit, that is the worst of the imaginable options for this industry.”
The findings on Brexit for the car sector is one in a string of recent pleas from business to politicians who are spearheading talks aimed at breaking a deadlock on Brexit. The U.K. and the European Union signaled their readiness to work on getting a deal as Prime Minister Theresa May prepared for a crucial summit aiming to persuade EU leaders to back her plans.
If passed directly on to consumers, import tariffs would push up the cost of U.K.-built cars sold in the EU by an average 3,000 euros, while U.K. buyers of a car from the EU would be faced with 1.700 euro-increase if manufacturers and their dealer networks were unable to absorb additional costs, according to the a report by the lobby.
The report also shows that some seven out of every ten cars registered by U.K. drivers come from factories in Europe, whereas U.K. car plants send more than 40 percent of their output to the continent. More than 1,100 trucks cross into the U.K. every day to deliver parts to the U.K. plants for vehicles and engines which are then exported back to the EU.
To contact the reporter on this story: Lyubov Pronina in Brussels at lpronina@bloomberg.net
To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, ;Anthony Palazzo at apalazzo@bloomberg.net, Tara Patel
©2018 Bloomberg L.P.
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