A no-deal Brexit threatens hundreds of thousands of job losses in the UK car industry and hundreds of millions of pounds in inward investment, the Government is being warned.
MPs said if volume car manufacturing had a realistic chance of survival post-Brexit, it would be essential to keep a close relationship with the existing EU regulatory and trading framework.
The Business Select Committee called on ministers to place a high premium on securing frictionless trade for the automotive sector.
Its report said it was unrealistic to expect an expansion of trade overseas to outweigh the loss of business to Europe from a hard Brexit.
Retaining good access to the single market is more important than having the freedom to make new trade deals with other countries, said the report.
Rachel Reeves, who chairs the committee, said: “The car industry is one of the UK’s great manufacturing successes. Innovative and efficient car plants across the country provide thousands of jobs and the automotive sector is a major contributor to our economic growth.
“There is no credible argument to suggest there are advantages to be gained from Brexit for the UK car industry.
“Regulatory consistency and friction-free trade benefits car companies, consumers and car-workers.
“The Prime Minister now needs to ensure common-sense pragmatism prevails and spell out the Government’s intention to seek continued regulatory and trading alignment with the EU in the automotive sector.”
The report said: “Leaving the EU without a deal would undoubtedly be hugely damaging to the UK automotive sector, more so than to other European countries.
“It would involve the introduction of a 10% tariff on cars and, because of the competitive nature of the business, the shift of volume manufacturing to countries remaining in the EU.
“There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation.
“The Government should acknowledge this and be pragmatic in seeking for the sector as close as possible a relationship with the existing EU regulatory and trading framework to provide volume car making — one of our great manufacturing success stories — a hopeful future.”
Unite assistant general secretary Tony Burke said: “The car industry would be hugely affected by a hard Brexit, but there should not be a specific deal just for this sector. It is essential that all the UK’s manufacturing base is protected by future barrier-free access.
“The government must act on this report’s findings, rather than trying to ignore reality. If it cannot negotiate a deal which defends hundreds of thousands of highly skilled manufacturing jobs, then it must step aside for a Labour government which will.”
A Business Department spokesman said: “The Government is seeking a partnership that delivers the maximum possible benefits for both the UK and EU economies, and maintains the strength of our world-leading automotive sector.
“From production to distribution, numerous companies in this sector around the UK and Europe are highly dependent on each other which is why we must ensure cross-border trade is as free and frictionless as possible post-Brexit.”