British drivers could see annual car service and repair bills rise by 10% if the UK leaves the European Union without a trade deal, an industry body has warned.
The Society of Motor Manufacturers and Traders (SMMT) said that tariffs on parts and other trade barriers arising from a hard Brexit.
Hard Brexit is beginning to seem more probable after the government’s international trade secretary Liam Fox said that a no-deal Brexit was more likely than an agreement.
The prominent Brexiteer put the chances of a no-deal Brexit at ‘60-40’ due to the ‘intransigence’ of Brussels negotiators. A spokesperson for the Prime Minister has since rejected the trade secretary’s remarks.
Mike Hawes, chief executive of SMMT said: “If we don’t secure a new trading relationship with the EU that is free of tariffs and customs checks, British consumers could face significant increases to their annual car repair bill due to new tariffs and other trade barriers.”
The car industry trade body based its estimates on World Trade Organisation (WTO) rules.
If Britain fails to agree a transition deal with the EU, then British-EU trade would fall back on WTO rules from March 2019.
An SMMT report said that a WTO tariff on imported car parts of between 2.5% and 4.5% would add £21 to the average car owner’s annual repair bill.
Other costs including quotas, subsidies, customs delays and regulatory barriers could add an extra £49 onto repair bills.
“Some 80% of replacement car parts fitted to British cars are imported, with almost three-quarters of these coming from EU-based suppliers. However, the manufacture of components in the UK is growing, making the risk of tariffs on British products sold in Europe and other key global markets another major concern,” the SMMT said.
Earlier this year, Nissan invited a large group of international component manufacturers to its UK base in Sunderland to encourage more suppliers to set up in Britain.
Other UK car manufacturers have pursued a similar strategy to try and avoid paying tariffs on parts used in the manufacturing process.
Many parts, however, cannot realistically be manufactured in the UK at costs that are comparable with the rest of Europe.