Five years on from the signing of the UK-EU Trade and Cooperation Agreement (TCA), Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), stated that the UK automotive sector is at a pivotal point. In the latest SMMT Trade Report, the sector’s resilience is noted despite significant headwinds, including geopolitical uncertainty and rising protectionism. The sector is on track to generate more than £110 billion in trade for the third consecutive year.
The report highlights the UK’s continued link to the EU. Last year, £68.4 billion in automotive trade crossed the Channel, which is almost half as much more than the trade with the rest of the world combined. More than half of all UK car exports go to the EU, and the majority of vehicles bought in the UK are European made.
A major concern is the looming introduction of stricter rules of origin for batteries in January 2027. This, combined with unclear definitions for local content, risks tariffs of up to 22% on electrified vehicles. Hawes warned that this would not only undermine the sector’s competitiveness but also slow down the transition to electrification.
Hawes stated that the SMMT is calling on the government to take proactive steps. The organisation suggests monitoring compliance rates, securing a workable definition for cathode active material, and expediting negotiations to re-join the Pan-Euro Mediterranean Convention. The SMMT believes that forging closer ties with the EU and prioritising the automotive sector in the country’s trade strategy will help secure its future, create jobs, and drive a net-zero future.