British car manufacturing hit a 16-year high in the first half of 2016, but the industry says future growth, jobs and investment are at risk following the Brexit vote.
Almost 900,000 cars rolled off production lines at UK factories in the first six months of the year, 13% more than the same period in 2015.
It was the best half-year performance since 2000, according to the Society of Motor Manufacturers and Traders (SMMT), as billions of pounds of earlier investment in new models came to fruition.
About 78% of the cars built in UK factories in the first half-year were destined for other countries, with the EU the biggest market.
Mike Hawes, the SMMT’s chief executive, said the outlook for UK car manufacturing was uncertain now that Britain had opted to pursue a future outside the EU.
“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.
“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.”
The SMMT said a survey of its members – which include major car manufacturers such as Nissan, Toyota and Mini as well as smaller businesses – showed companies were worried about Britain’s relationship with the rest of Europe following the Brexit vote.
About 60% of parts supplied for cars built in the UK are imported, mainly from the continent. Of the members the SMMT surveyed, 57% believed Brexit would have a negative impact on their business.
The biggest concern was the potential negative impact of tariffs, custom charges and other barriers between the UK and the EU single market.
Other major concerns included a loss of access to EU trade deals, having no say in – but being bound by – regulations in their biggest export market, and the loss of access to skilled workers from within the EU.
“The UK automotive manufacturing sector has grown dramatically over the past few years and now employs 169,000 people, including many skilled EU nationals recruited to fill vacancies which the local labour force could not meet.
The lack of certainty regarding the future status of these workers in the UK was cited frequently as a concern,” the SMMT said.
The British car industry has enjoyed a prolonged period of growth. Last month alone, car production rose by 10.4% to almost 159,000 vehicles, the highest number for June since 1998.
Sales of new cars in the UK fell for only the second time in more than four years in June, in a sign that British consumers were feeling less confident about spending money on big items.
