The Society of Motor Manufacturers and Traders has called for the UK to remain within the single market and customs union during the course of the Brexit negotiations, which began on 20 June.

The SMMT warned that without the implementation of an interim trading agreement UK automotive businesses could be forced to pay high tariffs under harsh World Trade Organisation rules. The industry body also admitted it is not confident a final agreement on a new relationship with the European Union that benefits the UK motor industry will be achieved by March 2019, the deadline for the Brexit talks to end.

Stressing the close integration of the UK and EU automotive sectors, the SMMT warned of lengthy negotiations before agreement would be reached on a new relationship that addresses tarriff and non-tariff barriers as well as regulatory and labour issues.

“If the UK cannot secure and implement a bespoke and comprehensive new relationship with the EU in two years’ time, we need a back-up plan,” said SMMT boss Mike Hawes.

“We need the Government to seek an interim arrangement whereby we stay within the single market and customs union until that new relationship is implemented.”

The SMMT campaigned for the UK to remain in the EU, the automotive sector’s biggest trading market, but said it accepted the result of the referendum and urged pragmatism in working towards a solution to avoid not reaching a deal and being forced to trade under WTO rules.

Hawes said: “We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO terms. This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.”