The UK motor vehicle manufacturing industry accounted for 10% of all UK trade in goods and 10% of manufacturing gross value added in 2016. It employed just over 155,000 people directly, or around 7% of all manufacturing jobs. Manufacturing sectors are dispersed across the country, and are especially important in certain regions such as the midlands, the northwest and the northeast. The size and distribution of activities help the industry command a significant amount of political attention.
More than 30 manufacturers currently build cars in the UK including premium and sports cars brands like Aston Martin, McLaren, and Rolls-Royce. In 2016, UK motor vehicle exports were valued at £31.5 billion. The industry is most heavily tied to the EU, which is not only the destination for 56% of UK car exports and 65% of British-built components, but is also the source of 69% of UK car imports and 79% of UK automotive components imports. However, exports to non-EU markets have been increasing.
The 10% average EU tariff on cars is higher than the EU trade weighted average MFN tariff for non-agricultural products, which stands at 2.3%. The USA, one of the UK’s other large export markets for cars, has an average MFN applied tariff on motor vehicles of 2.5%.
As far as future trade arrangements between the UK and the EU are concerned, automotive producers on both sides have an interest in avoiding the re-imposition of tariff and non-tariff measures. In view of supply chain linkages they also have an interest in minimising administrative frictions at the border, and impediments to the movement of labour. Brexit could also affect the UK’s eligibility to access EU funding to support R&D in the sector, as well as the free movement of labour.