The UK car industry has enjoyed an astonishing revival in the last 30 years. The bad old days of British Leyland, a byword for strikes and government bailouts, have long been forgotten. Largely as a result of the Thatcherite free-market revolution, Japanese manufacturers such as Nissan and Honda have opened up factories in Britain. Meanwhile, Mini has been revived under the ownership of Germany’s BMW, while Jaguar and Land Rover have been acquired by India’s Tata. The big American auto groups, Ford and General Motors, are active here too.
In total, the automotive industry was responsible for £61 billion of turnover and over 700,000 jobs in 2013.The UK made 1.6 million cars and commercial vehicles in 2014, making us the EU’s fourth largest manufacturer after Germany, France and Spain.
The industry is located in the UK not just because of its flexible markets but because it is a good place from which to serve the rest of the EU. In 2013, 77% of the vehicles made here were exported. Half of those went to the EU.
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If the UK no longer had access to the single market and merely relied on its WTO membership, our car industry would be exposed. The EU imposes a 10% tariff on imported cars and a 4% tariff on imported components for vehicles. If our industry had to pay such a tax, it would be hard-pressed to compete. Manufacturers would shift part or all of their production inside the EU so they didn’t have to pay the tax.
The switch wouldn’t happen overnight because you can’t just lift up a factory and cart it across the Channel. But whenever manufacturers had spare capacity inside the EU, they would use it instead of their UK factories. And whenever they decided to make new investments, they would focus those elsewhere. No wonder that Nissan, Britain’s biggest car-maker, said in 2013 that it was “very important” that the UK stayed in the single market and that if it left it would “need to reconsider our strategy and our investment”. What’s more, 92% of automotive companies said it was more beneficial to their business for the UK to stay in the EU, according to a survey by their trade association. Only 3% wanted to quit.
This is an excerpt from “The In/Out Question: Why Britain should stay in the EU and fight to make it better” by Hugo Dixon.
Factchecking by Sam Ashworth-Hayes