BOSSES in car-making across Europe have suddenly shifted from a bad case of doom and gloom into believing that bright spells could be ahead.

Shares of VW rose by 4 per cent. Daimler, BMW, Fiat, Renault and Peugeot Vauxhall and its parent PSA all rose, along with car parts suppliers, including Michelin, Pirelli and Continental.

Much of this rise was greatly boosted by reports that China may cut sales tax on cars in half to boost demand, but thanks are also due to strong results from HSBC, as well as Standard & Poor’s decision not to downgrade the Italian government’s credit rating.

Stock exchange indices now tend to end up higher rather than lower after a period in which the sector has been hard hit by falling sales, particularly of diesel models after the Volkswagen emissions scandal, with the impact of a US-Chinese trade war and the impending switch from combustion to electric engines all playing a role. But, if you’d just listened to the major players in Britain, you’d think it’s just a problem of Brexit.

Yet shares in the US giants, General Motors and Ford, are up by 4 per cent after a fall of more than 20 per cent this year alone — hardly a Brexit issue.

Now that, according to the major car firms, uncertainty is all down to the statement that it’s the single market or nothing by EU chief negotiator Michel Barnier, the chaos that would emerge from customs plans to keep Britain half in and half out, shaking it all about in the process, is being bandied about as a reason for a second referendum on in or out. What’s going on?

Specialist car manufacturer Aston Martin has floated on the London Stock Exchange, a move contrasting strongly with the mood music from much of Britain’s auto industry.

Jaguar Land Rover in Solihull has ceased production for two weeks after a slump in demand of 12.3 per cent year-on-year, with a plan to shift all production of the Discovery model to Slovakia hardly helping.

Overall sales of new cars in the UK plunged by a fifth in September, but the biggest problem was new emissions tests impacting on delivery backlogs as the Worldwide Harmonised Light Vehicle Test Procedure, measuring CO2 and fuel economy, took effect.

A No-deal Brexit would result in British car manufacturers trading with EU countries on World Trade Organisation rules, which add a 4.5 per cent tariff to car parts and 10 per cent to finished cars. 

An annual extra bill of £2.7bn added to imported EU cars would make each one cost £1,500 more — actually, extra help for British-based manufacturers. Obviously, it also impacts on the cost of British exports to the EU, but here much of the difficulty arises from the labour market policies of successive British governments since the 1980s. 

The parts that make up a car often don’t originate from Britain, whilst assembly work carried out here is disproportionally lower-paid than continental manufacturers.

Aston may not export huge numbers of its cars to the EU, but it gets around two-thirds of its parts from the single market. Its response has been to increase the amount of stock it will hold, such as engines from Germany’s Daimler, which owns 5 per cent of Aston, from three days worth to five days. 

This will largely insulate from delays at ports associated with increased customs. It’s a small application of investment funds that will pay dividends, especially for high-value vehicle manufacturers.

In contrast, larger firms are just squealing about delays, scaring everyone in the process, in the hope that the government will solve their problems for free by agreeing a single market deal.

Instead of rethinking the philosophy of just-in-time, the big car bosses simply want to turn the screw harder. Yet the difference in competitiveness of products in the mass volume car industry here compared to the continent can be seen in the German emphasis on vocational education, combining academic studies and on-the-job training for apprentices.

Their companies also tend to have close links with the banking sector, which guarantees long-term funding. While UK companies regularly blame others, mostly their workers, for missing short-term targets, their German competitors focus on making small continual improvements to their products long-term that help to keep them ahead of the field.

The truth is that Britain’s role in the EU for decades has been a supplier of cheap labour to west European car manufacturers, to make the final version of cars of other nations. The average pay rate of a UK car worker is a little over £19 per hour, around £39,800 annually. US car workers are on around £57,000 a year, German £55,000, Japanese £50,000.

Labour strikes by car workers are not the cause of the current malaise, but there is a massive unannounced capital general strike by the bosses.

Total manufacturer investments into new plant, machinery, tooling and equipment, models and model development fell to £347.3 million between January and June this year, down from £647.4m in the first half of 2017. The UK’s motor industry has halved investment in six months, all to press May to give them what they want over the single market.

It’s true that our already damaged automotive parts sector faces a big challenge.

After a no-deal Brexit, parts made in the UK used by continental manufacturers will no longer count towards EU minimum production, thereby potentially classing the whole commodity as no longer an EU product.

A Dutch-assembled car with British parts would be subject to trade tariffs when transported to other EU countries. Yet this can work both ways and could be advantageous to Britain, given the high level of parts made in the EU that would still be used here after Brexit.

The problem for Britain’s car industry bosses is that they need to up the level of wages and plant investment, raising productivity so that they compete on a level playing field with France and Germany.

Otherwise customs tariffs will simply do the same job. For too long, Britain’s car workers have been at the soggy end of the pitch. Don’t blame Brexit. Blame the bosses and their government.

The important issues around automotive trade could have already been settled. Currently, Mini cars, though mostly made in the UK, are approved in Germany, while cars from the Czech brand Skoda are certified in Britain. With the UK leaving the single market, type approvals issued by the UK Vehicle Certification Agency (VCA), a key force in the EU, will need some other future mechanism.

The VCA is an arm of the Department for Transport, financed by charging manufacturers. It ceases to be an EU type-approval authority after Brexit. Citroën, Honda, Jaguar Land Rover, Peugeot, Skoda, Toyota, and Nissan all pay for these services and some are already trying to commission another European agency.

Now, car manufacturers require fresh certificates for new models, which are released roughly every seven years, but also need this for occasional design or engine alterations.

This means that agreement by the EU for the VCA to continue or for it to appoint another European alternative is needed very soon. The VCA could continue to be a global type approval authority, but the failure to even discuss the issue with the commission by the May government speaks volumes. However, approvals for systems and components which meet the standards applied by a United Nations body would still be recognised.

The United Nations Economic Commission for Europe was established in 1947 as one of five regional commissions under the administrative direction of UN headquarters.

As well as the EU and other European states, it includes the major vehicle manufacturing countries of the US, Japan and South Korea, but also Canada, the Central Asian republics and Israel, 57 nations in all. Russia and Serbia are in the club. Representing 20 per cent of the world’s population, UNECE is headquartered in Geneva, Switzerland and acts within the framework of the policies of the United Nations.

Whole vehicle approval requires hundreds of tests defined by its regulations that, while fixed in EU law, flow from a 1958 agreement.

This worldwide technical harmonisation offers easy access to global markets and makes the key vehicle regulations for the EU to adopt, which it then passes on as directives. Thus, UNECE already runs a common market wider than the EU single market.

Such an approach — joining the world — enables Britain to take advantage of an already well-developed structure that could end the idea of a Europe of radiating circles ebbing from Brussels and Strasbourg.