UK car sales slump; makers warn on Brexit costs

UK car sales slumped in 2020.

Over the year they were down almost 30%.

That’s the biggest annual drop since 1943, back in the depths of World War II.

Demand was hardest hit in April, when sales dropped 97% during the country’s first nationwide lockdown.

Dealers were better prepared for subsequent lockdowns, with click-and-collect services rolled out.

But overall sales still sank to their lowest since 1992.

Now the industry faces a third national lockdown, and that’s not its only worry.

The UK Society of Motor Manufacturers and Traders warned Wednesday (November 6) that Brexit still poses risks.

Since January 1st the UK and EU have been operating under a trade deal that secures zero-tariff and quota-free trade for the sector.

But the industry body says additional bureaucracy will still impose costs.

That includes a requirement to approve vehicles in both the EU and UK.

To avoid tariffs, automakers will also have to prove that their vehicles contain enough EU and UK content.

That threshold is set at 55% for conventional cars, and 40% for electric vehicles.

The SMMT says the new red tape could raise costs for makers by a high single-figure percentage.

Video Transcript

- UK car sales slumped in 2020. Over the year, they were down almost 30%. That is the biggest annual drop since 1943, back in the depths of World War II.

Demand was hardest hit in April, when sales dropped 97% during the country's first nationwide lockdown. Dealers were better prepared for subsequent lockdowns, with click and collect services rolled out. But overall sales still sank to their lowest since 1992.

Now the industry faces a third national lockdown. And that's not its only worry. The UK Society of Motor Manufacturers and Traders warned Wednesday that Brexit still poses risks.

Since January the 1st, the UK and EU have been operating under a trade deal that secures zero tariff and quota free trade for the sector. But the industry body says additional bureaucracy will still impose costs. That includes a requirement to approve vehicles in both the EU and UK.

To avoid tariffs, automakers will also have to prove that their vehicles contain enough EU and UK content. That threshold is set at 55% for conventional cars and 40% for electric vehicles. The SMMT says the new red tape could raise costs for makers by a high single figure percentage.