Vehicle Production: Brexit vote to lead to 'instability' in the car market

The UK's vote to leave the EU will cause instability and uncertainty that will challenge the UK car industry.

That was the verdict of the trade body, the Society of Motor Manufacturers and Traders (SMMT), as it reported record turnover for 2015.

While the UK's automotive sector has "gone from strength to strength", the leave vote may cause problems for the car industry, it said.

Turnover rose 7.3% to £71.6bn while jobs and vehicle production also rose.

However SMMT chief executive Mike Hawes said that the outlook had been clouded due to uncertainty about dealing with trading partners in Europe.

"As a result (of the vote), the industry now faces new challenges. Uncertainty, economic instability and an undoubted impact in terms of cost, influence and ease of business," he said in a speech.

The number employed in the sector rose by 17,000 to 814,000 and there was a 5% rise in vehicle production to 1.7 million in 2015, the SMMT said, and car manufacturing output is already up more than 10% so far this year.

But the UK's future access to the single market has been brought into question following the vote to leave the EU.

'Unrestricted access'

Hawes said success has been due to unrestricted access to the single market, input to EU legislation to safeguard the interests of UK Automotive, and the ability to recruit talent from abroad.

He warned that the threat to this from leaving the union could jeopardise the ability to access important markets.

"We need full and unrestricted access to the single market now and in the future, 80% of what we produce is exported and the only way to succeed is through unrestricted and reciprocal access to the EU and global markets," he told an industry summit.

Demand for both cars and commercial vehicles in the UK reached record levels in 2015, with 2.6 million and 420,000 registrations respectively.

Investment in research and development by the industry also reached a record high of £2.5bn in 2015, representing around 12% of the country's total spending.