Britain blowing out of the EU without a deal on certifying vehicles for use in other countries would be disastrous for the UK car industry, MPs have been told.
The warning came as executives from the car industry gave evidence to the Business Select Committee on the impact of Brexit on the sector.
Under current laws, cars certified by the British regulator can be used in other EU states under reciprocal arrangements.
But if the UK were to leave without a deal that continues this arrangement it could mean stopping production at UK car plants until a new certifying authority is found so vehicles can be sold abroad.
Sports car manufacturer Aston Martin warned this would be “semi-catastrophic” for the Warwickshire-based business which produced 3,700 cars last year.
Mark Wilson, the company’s chief financial officer, said: “We are a British company and build our cars only in Britain where they are certified by the Vehicle Certification Agency.
“We need to make sure they pass certification. That puts us in a stark position: if they could not pass then we would be in the semi-catastrophic position of having to stop production until we can get them recertified to a new approach, whether that is [EU] or US.”
Mike Hawes, chief executive of car industry trade body SMMT, added it might not even be possible to meet all the requirements of the certification process if the UK had to start again from scratch, rather than build on existing arrangements.
Mr Wilson said he “hoped it would not come to that”, adding he was “encouraged” by talk of a transitional deal.
MPs also heard that the UK car sector – which has an annual turnover of £79.5bn and exports about 80pc of cars built in the UK – has seen investment in plants tumble since the referendum as uncertainty weighs.
Investment had been averaging £2.5bn a year but fell to £1.6bn in 2016 and is headed to be less than £1bn this year, with anecdotal evidence of car companies "sitting on their hands", said Mr Hawes.
Honda, one of the biggest car companies in the UK producing 134,000 of the 1.7m vehicles built in Britain last year, also warned that a lack of clarity about what the relationship with the EU will be post-Brexit was delaying investment.
Patrick Keating, government affairs manager for Honda, said: “Early clarity is a requirement. If UK certification was no longer valid or not accepted we would need to bridge that gap.”
Honda also warned about the risk of customs delays, saying 2m components a day arrive at its UK plants on 350 trucks. The company also operates “just in time” manufacturing and holds only one hour’s supply of components from the EU on its production lines, meaning that if shipments were held up at ports work would grind to a halt.
Rough calculations by Honda put the price of trucks clearing customs in 17 minutes instead of the current two minutes at £850,000 a year.
Mr Keating said the company was looking at building warehouses to increase stocks, but warned that this would take at least a year to just to get planning, emphasising the need for clarity about what the company can expect from Brexit.
The globalised nature of the car industry also poses huge problems. Because only about 40pc of the components used to build cars in the UK come from British suppliers, vehicles being exported from the UK could fail to meet “rules of origin” requirements and attract hefty trade penalties.
MPs were told that while this might seem to be an opportunity for the UK supply chain, the capacity is not there.
Mr Wilson, of Aston Martin, said: “The idea we could somehow swap 60pc of our European supply base into the UK, which is strong but does not exist at that level, is an extraordinary ask.”
Mr Hawes called such suggestions “ambitious”. He added: “What attracts suppliers to the UK is a strong and growing vehicle manufacturing base. If you do not have that then why would you invest?”