palinchak/Bigstock.com

The UK's top car manufacturing bosses have warned Theresa May about the consequences of leaving the EU without a trade deal.

A high-level meeting of car industry executives took place at No 10 yesterday, including bosses of Honda, BMW, Toyota and Jaguar. They warned that a 'no deal' could seriously damage the £77.5bn-a-year industry.

Of key concern was the UK car makers' ability to compete globally.

One person at the meeting warned that clarity was needed "within months", so that firms could make investment decisions which had been delayed since the UK's vote to leave the bloc last year.

The industry faces a "cliff edge" situation if it reverts to WTO tariffs in the event of a “no deal."

Nearly 80 per cent of UK-built cars are exported, amounting to 13 per cent of all UK exports. Some industry figures have suggested reverting to WTO rules could cost the industry £4.5bn.

Tariffs could also make it very difficult - and expensive - to move parts between the UK and the EU, potentially making the UK a less attractive place to do business.

Just 40 per cent of parts used in British vehicles are made in the UK, with much of the rest coming from the EU.

A “no deal” situation would also harm EU manufacturers, since many EU-based car factories use components made in Britain.

One senior executive at the No 10 meeting suggested that the potential impact of a no-deal scenario was not fully understood at the top levels of government.