LONDON -- Automakers said the UK must secure a Brexit deal that preserves tariff-free access between Britain and the European Union after Prime Minister Theresa May formally launched Brexit divorce proceedings on Wednesday.
Ford Motor said unfettered access to EU markets is crucial for its UK operations.
Any deal must include securing tariff-free trade with countries in the EU's customs union and not just the 27 EU member states, Ford of Europe President Jim Farley said.
Ford is Britain's biggest engine-maker. It builds Transit vans in Turkey, which is not part of the EU but is in the customs union.
"It also is critical that a transitional period is put in place to ensure that customers are not penalized and to maintain free trade," Farley said.
The UK auto industry association, SMMT, fears that without a formal agreement, British-built cars exported to the EU would face export tariffs of up to 10 percent, risking the future of plants. "We will continue to work with government and our European counterparts but no deal is not an option," SMMT CEO Mike Hawes said on Wednesday.
More than half of UK vehicle exports were exported to EU markets in 2015. PA Consulting calculated that the average car price in Britain would rise by 2,300 pounds ($2,900) in the event of a “hard Brexit” under which the country loses membership in the single market. It would also hamper the free movement of components between production sites across the continent.
BMW, which builds Mini and Rolls-Royce cars in England, said the UK government must listen to the views of global companies during Brexit talks, with continued tariff-free access to Europe of crucial importance.
"As a major investor and employer in the UK, the BMW Group firmly believes the government should take the concerns of international business into account," a spokeswoman said on Wednesday. "Not only free trade but also cross-border employment opportunities and unified, internationally applied regulations are of proven benefit to business, the economy and individuals."
BMW said earlier this month that it is reviewing its factories in the UK ahead of Brexit and that it has the flexibility to move production elsewhere if necessary.
Toyota said on March 16 that it will invest 240 million pounds ($294 million) in its UK car plant to allow it to build vehicles on a new platform but warned that continued tariff-free access to the European single market remained crucial.
Nissan Senior Vice President Colin Lawther said 10 percent tariffs on exports of the automaker's Qashqai SUV, built in northeast England, and 2.5 to 4.5 percent tariffs on parts, would have a "pretty disastrous" impact on the automaker's profits. The company could face a 500 million-pound ($620 million) hit to profit should the UK fall back on World Trade Organization rules, he told lawmakers in the House of Commons in London last month.
Reuters and Bloomberg contributed to this report