German industry is preparing for a "worst case scenario" Brexit, a top car executive has told Sky News.

Matthias Wissmann, head of the German Automotive Association, said contingency plans were being formed to deal with a possible failure of Brexit negotiations in the next 18 months.

"We have a task force that considers what will happen in a worst case but hope politicians avoid that worst case," he told Sky News on the sidelines of the Frankfurt Motor Show.

That worst-case "hard Brexit" scenario is thought to include the imposition of tariffs, and non-tariff barriers, if the UK

becomes a "third country" in EU law in March 2019.

Mr Wissmann suggested that the UK government and the EU had to be "very careful not to destroy the value chain" of the European car industry, and the options were running out as Brexit negotiation time ticked down.


"If you ask me what the best solution is, it's clear - Britain should stay in the internal market, should stay in the customs union," he said.

"Any other solution is very complicated and will need years to make it possible."

When asked to justify why the UK should stay in a customs union that would limit the ability to sign new trade deals, Mr Wissmann pointed out that Germany was the world's top exporter and the car industry within it... all achieved within trade deals negotiated by the EU for the UK and Britain.

"Do you really think that you will perform much better with your own trade agreements? I'm German. If you ask: who is the most successful exporter in the world? It is Germany.

"If you ask which industry it is - it is the German auto industry.

"Doesn't the EU with its 500 million (people) get the better results? That's the open question."

Image: Mr Wissmann with Germany's Chancellor Angela Merkel

Mr Wissmann had little time for the idea that his German car industry would approach Chancellor Angela Merkel and force a compromise in Brexit talks on behalf of an industry which exports one in seven cars to the UK.

"It's up to the (UK) Prime Minister to shift her position," he said.

"Britain is very important for us, but the EU27 is even more important for us, as a market and as a political concept...

So we do the utmost to support anyone who keeps Britain as close as possible to the EU.

"But if you ask me for priorities: keeping the EU27 together is even more important than to keep Britain nearby, so let the British government be convinced that they have to build a bridge."

He said that a cliff-edge Brexit would "change everything", including German industrial investment in the UK.

"If we will fall down the cliff edge, it would be very critical for all sides, also damage part of our concepts in Britain and elsewhere, but to be clear, the higher price would be paid by the British."