Auto industry issues stark warning over hard Brexit

Some of the world's biggest car-makers have warned that a hard Brexit would put significant pressure on their UK operations, urging the government to agree a standstill transitional period amid fears that time is running out.

Ford has warned that reverting to WTO tariffs would "place a very significant cost on Ford in Britain and across Europe" in three critical areas: import of components, export of engines and import of cars and vans.

"The impact of tariffs on our business would be considerable," the firm's submission to the Business, Innovation, Enterprise and Skills (Beis) committee states. Using Society of Motor Manufacturers and Traders (SMMT) figures, which estimated that tariffs would push up the duty cost by £1,500 per car, Ford said "this cost would either increase the cost of a vehicle, or reduce the choice available to the consumer- or possibly both".

A time-limited transition is key, and business needs to know a timeframe as soon as possible, Ford argues. The car company has called for a standstill agreement, in which all current trading and customs arrangements apply.

"We do not believe that the new customs, border and documentation arrangements necessitated by the UK leaving the EU and customs union could be put in place by April 2019," it says.

The auto giant also warned that leaving the Single Market would affect its captive finance arm, Ford Credit Europe, which finances 40 per cent of Ford vehicles sold in the UK. "Ford cannot afford any kind of disruption to FCE’s continuity of financing," the group said.

Ford also weighed in on the new UK customs system, which a group of MPs warned over this morning. The car firm said it "may not be able to handle​​ the expected surge in demand… if a status quo transition period is not achieved".On labour, the car firm said ensuring free movement was "critical" to maintaining operations across Europe and the UK. It recommends replacing the EU principle with "a workable light-touch visa system, in order to ensure that Ford can continue to fill vital roles in the UK".

"There is a well-documented shortage of local engineering talent, specifically in relation to software engineers to support emerging areas of activity around electrification and mobility. Any reduction in our ability to attract and retain these skills would impact the competitiveness of our UK operations against other markets," it said.

But it wasn't all bad. Ford said it saw "potential opportunities in future UK trade deals" and called on government to work closely with the sector to assess specific trade deals, "taking into account the growing importance of electro-mobility and data services".

"Clearly, it will be critical to secure an ambitious free trade arrangement with the EU as a necessary platform on which to build other opportunities. Ford also believes that the UK should prioritise preserving free trade with those territories already covered by FTAS with the EU, such as Canada and South Africa," the group said, adding a comprehensive free trade deal with Turkey was a priority to support engine exports and its commercial vehicle business.

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