The British motor industry has warned that “no one would confess to being Brexit ready” in their trade.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), argues that his members are “increasingly concerned” about the prospects for the UK leaving the EU on World Trade Organisation (WTO) terms, in the light of developments since Theresa May published the government’s latest Brexit white paper, which he and the SMMT welcomed.

Michel Barnier, the EU’s chief negotiator, has since expressed scepticism about the proposed Facilitated Customs Arrangement (FCA), which would have been of particular value to manufacturing and the automotive sector.

In the light of EU resistance, and growing UK political volatility, the chances of the UK going to a “no deal” exit are increasing, meaning that Britain would move to WTO terms, as opposed to staying in the Single Market, the customs union or the FCA.

This would imply tariffs of up to 10 per cent in UK-EU trade in cars and parts, and greater bureaucracy in both directions, which would only be partly mitigated by “stockpiling” in the short run, given the demands of “just in time” manufacturing techniques and integrated cross-border supply chains.

There is a tail risk that factory production of models such as the Mini at BMW’s plant in Oxford could be disrupted if crucial car components become unavailable.

Mr Hawes added that the prospect of a “no deal” Brexit was something no-one wished to see and that industry leaders wished to see “all options open as long as possible”.

Reflecting on the 1,100 trucks that enter the UK from Europe every day to feed its factories, he said that the eight months remaining until formal Brexit on 29 March 2019 were “a real challenge”.

British car production for the home market almost halved in June, compared to the same month a year ago, due to what the industry calls “a perfect storm” of factors that resulted in a freakish result.

Overall, UK manufacture of cars was just 3.3 per cent down in the year to the end of June 2018, buoyed by exceptionally high demand for British products in certain export destinations, notably Japan (up 77.3 per cent), Korea (up 67.8 per cent) and relatively stable demand in China, the US and Europe.

America is the biggest single national market for British automotive exports but is dwarfed by the combined market of the other 27 members of the EU, who took just over a half of exports (53.4 per cent in the first six months of 2018).

The steep decline in production for UK market specifically (47.2 per cent) was said to be due to certain-one off and some short-run actors, such as manufacturers’ changeovers of model lines, and the hurried adoption of real-world fuel consumption standards, but also from a sharp reduction in UK home market demand, which was in turn driven by continuing weakness in consumer sentiment, uncertainty about the future for diesel cars and the general fog surrounding Brexit.

However, given that about four out of every five cars made in Britain goes abroad to be sold, British domestic demand is relatively small contributor to overall demand. The SMMT said it was confident that UK production would end the year at about 1.6 million cars, around the same level as in 2017.

Although broadly supportive of the government’s white paper, derided by some critics as “dead on arrival” in Brussels, Mr Hawes added that the FCA is just “an idea at the moment” which required “a huge amount of work and investment” even to make practical.

The SMMT’s position remains, as it has since the EU referendum, that the industry requires the same degree of frictionless access to its EU markets as it enjoys today, and that anything that falls short of that will damage competitiveness and, eventually, investment and jobs.

Key investment decisions by major companies such as Nissan, Honda and Tata (Jaguar Land Rover) on fresh investment on new models, engines and componentry still hang in the balance.

Brexit casualties Show all 10 1 /10 Brexit casualties Brexit casualties Andrea Jenkyns - Resigned from Parliamentary Private Secretary at the ministry for housing, communities and local government role May 2018 - The Morley and Outwood MP said: “We want to see a new relationship with Europe, with a new model not enjoyed by other countries – nothing that leaves us half-in, half-out. “And in order to achieve this, we need to leave the customs union.” Ms Jenkyn’s also said she wished to dedicate more of her time to Parliament’s influential Exiting the European Union select committee, after a series of “unbalanced” reports produced by MPs PA Brexit casualties David Davis - Resigned from Secretary of State for Exiting the European Union role July 2018 - quit following a major row with May over her plans for post-Brexit relations with the EU. Davis resignation letter said: “As you know there have been a significant number of occasions in the last year or so on which I have disagreed with the Number 10 policy line, ranging from accepting the [European] Commission’s sequencing of negotiations, through to the language on Northern Ireland in the December Joint Report. “At each stage I have accepted collective responsibility because it is part of my task to find workable compromises, and because I considered it was still possible to deliver on the mandate of the referendum, and on our manifesto commitment to leave the Customs Union and the Single Market. “I am afraid that I think the current trend of policy and tactics is making that look less and less likely.” He went on to argue that the “general direction” of Ms May’s policies would leave the UK “in at best a weak negotiating position, and possibly an inescapable one”. AFP/Getty Brexit casualties Steve Baker - Resigned from Minister at the Department for Exiting the European Union role July 2018 - Mr Baker, a key Tory figure in the Leave campaign, was David Davis’s main lieutenant at Dexeu, and was hailed as ”courageous and principled” by other Brexiteer Tories as he also left. Reuters Brexit casualties Boris Johnson - Resigned from Foreign Secretary role July 2018 - resigned over May's Chequers plan. In his resignation letter to the prime minister, Mr Johnson said: "On Friday, I acknowledged that my side of the argument were too few to prevail and congratulated you on at least reaching a Cabinet decision on the way forward. "As I said then, the government now has a song to sing. "The trouble is that I have practised the words over the weekend and find that they stick in the throat." Reuters Brexit casualties Conor Burns - Resigned from Parliamentary Private Secretary to Foreign Secretary role July 2018 - A Brexit supporter who worked alongside Boris Johnson stated in his resignation letter: “I've decided it's time to have greater freedom. I want to see the referendum result respected. And there are other areas of policy I want to speak more openly on.” Rex Brexit casualties Chris Green - Resigned from Department for Transport role July 2018 - The Bolton West MP said: "Parliament overwhelmingly decided to give the decision of whether to leave or remain in the European Union to the British people and they made an unambiguous decision that we ought to leave. "I have always understood the idea in 'Brexit means Brexit' is that the final deal should be clear to me and my constituents - that we have, in no uncertain terms, left the European Union. Twitter Ads info and privacy "The direction the negotiations had been taking have suggested that we would not really leave the EU and the conclusion and statements following the Chequers summit confirmed my fears. "I recognise that delivering Brexit is challenging, however I had hoped at tonight's meeting that there would be some certainty that my fears were unfounded but, instead, they have been confirmed. "I have been grateful for the opportunity to serve as Parliamentary Private Secretary and it is with regret that I offer my resignation with immediate effect." PA Brexit casualties Maria Caulfield - Resigned from Conservative Party vice-chair for women role July 2018 - resigned over May's Chequers plan. Lewes MP warned that the direction of travel did “not fully embrace the opportunities that Brexit can provide”. Ms Caulfield said in her letter to the PM: “The policy may assuage vested interests, but the voters will find out and their representatives will be found out. This policy will be bad for our country and bad for the party. “The direct consequences of that will be prime minister Corbyn.” PA Brexit casualties Ben Bradley - Resigned from Conservative Party vice-chair for young people role July 2018 - resigned over May's Chequers plan. The Mansfield MP said: “I admit that I voted to Remain in that ballot. What has swayed me over the last two years to fully back the Brexit vision is the immense opportunities that are available from global trade, and for the ability for Britain to be an outward looking nation in control of our own destiny once again. “I fear that this agreement at Chequers damages those opportunities; that being tied to EU regulations, and the EU tying our hands when seeking to make new trade agreements, will be the worst of all worlds if we do not deliver Brexit in spirit as well as in name, then we are handing Jeremy Corbyn the keys to No10.” PA Brexit casualties Robert Courts - Resigned from Parliamentary Private Secretary role July 2018 - resigned over May's Chequers plan. MP Mr Courts said: “I have taken a very difficult decision to resign my position as [parliamentary private secretary] to express discontent with the Chequers [plans] in votes tomorrow. “I had to think who I wanted to see in the mirror for the rest of my life. I cannot tell the people of Woxon that I support the proposals in their current form.” Getty Brexit casualties Scott Mann - Resigned from Parliamentary Private Secretary role July 2018 - resigned over May's Chequers plan. "I fear elements of the Brexit white paper will inevitably put me in direct conflict with the views expressed by a large section of my constituents. I am not prepared to compromise their wishes to deliver a watered-down Brexit. "The residents of North Cornwall made it very clear that they wish to have control over our fishery, our agricultural policy, our money, our laws and our borders. I will evaluate those principles against the Brexit white paper and ensure that I vote in line with their wishes." Rex

The SMMT is firm that any current arrangements, governed by the EU Customs Union and Single Market, should continue until satisfactory new rules have been implemented, not merely agreed in theory or principle.

If not, then the negative effects will be felt unremittingly through the 2020s, given the nature of the industry’s investment cycle, driven by relatively long model cycles.