Carmakers call for transitional European Union deal

Hawes said it was vital an interim agreement be secured by the United Kingdom government to safeguard the United Kingdom motor industry. Without agreed interim arrangements, businesses would be faced with the “cliff edge’ and forced to trade under the World Trade Organisation rules – the worst foreseeable outcome for the sector, its employees and the British economy”.

The Mike Hawes, chief executive of the SMMT said reaching a trade deal with the European Union in two years “cannot be delivered” and instead calls on a transitional deal. Without something to ease the change, it warned the industry will suffer.

The SMMT said any new relationship with the European Union would need to address tariff and non-tariff barriers, regulatory and labour issues, “all of which will take time to negotiate”. “This would undermine our competitiveness and our ability to attract the investment that is critical to future growth”.

United Kingdom auto plants also depend heavily on the free movement of components to and from the continent.

Greg Clark, the Secretary of State for the Department for Business, Energy and Industrial Strategy, said the report “shows that we are still making good progress in increasing the United Kingdom content of the vehicles we produce”.

Some 80 per cent of the 1.7m cars built each year in Britain are exported.

The SMMT announced a record turnover of £77.5bn for 2016, its seventh consecutive year of growth, underlining the importance of the sector.

Mike Hawes, chief executive of the Society for Motor Manufacturers and Traders, said: “The domestic supply chain is the backbone of UK Automotive and its health is crucial to the success of the whole sector”.

While the council said the figures marked a significant move in the right direction, the proportion could still be problematic for some export agreements.

The SMMT is calling on government to seek an interim arrangement with the EU that would maintain membership of the single market and customs union until a final agreement on a new relationship with the EU is negotiated and implemented. “We need to have arrangements where European Union content counts as United Kingdom and vice versa – that should also allow us to take advantage of free trade arrangements with 30-40 other countries that the European Union has”.