A ‘no-deal’ Brexit could see UK buyers pay £1,500 extra for a new car and £1,700 more for a new van if the manufacturers and dealer networks are unable to absorb the application of trade tariffs between the UK and the EU, the Society of Motor Manufacturers and Traders has warned.

The trade body warned a ‘no-deal’ “would undermine the industry’s ability to operate and cannot be an option”, adding that such a move would add £5bn to the UK-EU trade bill each year.

It claimed that without a withdrawal agreement production of vehicles may have to be halted, which could negatively impact the automotive industry in the UK and Europe.

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The SMMT also warned that import tariffs could hike the price of UK-built vehicles sold in European markets by an average of £2,700.

“Tariffs alone should be enough to focus minds on sealing a withdrawal agreement between the EU and UK but the potential impact of ‘no-deal’ means the stakes for the automotive sector are far higher,” said Mike Hawes, SMMT chief executive. “Without a deal, there can be no transition period and the complex issues surrounding tariffs and trade, customs, regulation and access to talent will remain unresolved. Our industry is deeply integrated across both sides of the Channel so we look to negotiators to recognise the needs of the whole European automotive industry and act swiftly to avoid disruption and damage to one of our most valuable shared economic assets.”