UK car manufacturing grows again, but Brexit concerns are looming

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UK car manufacturing saw its eleventh consecutive month of growth in June, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

Over 158,500 new cars were built in June – a 10.4% increase on June 2015 and the highest level for the month since 1998. It also brought to an end the best first half to any year since the turn of the century – a total of 897,157 cars have rolled off the production line so far in 2016.

The good news was tempered with a warning for the rest of the year and beyond following the Brexit vote in June. Over three-quarters (77.8%) of UK-manufactured cars are exported overseas, the majority of which are destined for the EU. However, 59% of the components used to build the cars are imported, mostly from European countries.

“UK Automotive is globally competitive with overseas demand for British-made products increasing, not least in Europe," said SMMT chief executive, Mike Hawes.

It is this symbiotic relationship that is causing concern, according to an SMMT survey. Well over half (57.1%) of respondents said the Brexit vote will have a negative impact on their industry, compared to just 8.3% seeing it as a positive. Worry was also raised by the potential negative impact of tariffs and customs charges (a concern for 68.4% of respondents), and loss of access to EU trade deals (66.4%).

"The latest increase in production output is the result of investment decisions made over a number of years, well before the referendum was even a prospect," said Hawes. "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.”