UK car manufacturers’ fears that a no-deal Brexit at the end of the year will impact their competitiveness in the European markets are unfounded, a minister has said.

The concerns are centred over regulatory alignment between the UK and EU after the December 31 deadline to agree trading conditions between the two expires.

Nadhim Zahawi, a business minister, said he is “confident” that British negotiators will be able to broker a deal with the EU that ensures no tariffs or quotas on car parts and keeps just-in-time supply chains running

Jaguar LandRover (JLR), Nissan, Honda, Toyota, Vauxhall and BMW/Mini all make cars in the UK for both domestic and overseas markets. The businesses are concerned that any split without a deal will affect the supply chain. Car manufacturers rely on a plethora of parts' manufacturers, many of which are based outside of the country where the final assembly takes place.

Opposition politicians have claimed that, if the UK leaves the EU without first agreeing trade terms, it will disrupt business. The EU has already stated that there is insufficient time to strike a deal by the end of the year. Existing rules remain during the transition phase between leaving at the end of this month and the end of the year.

“The heads of terms agreed by the UK and the EU say there are no tariffs, no quotas and that is what we are going to strive for. And that, I believe, we will be able to deliver,” said Zahawi.

Last year car makers took steps in preparation for Brexit: JLR announced thousands of job cuts, Honda said it will close its only British factory in 2021 and Nissan scrapped plans to build the X-Trail SUV at its Sunderland plant. The future of Vauxhall’s factory in Ellesmere Port is also under threat.

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