The Society of Motor Manufacturers and Traders (SMMT) has called for quicker progress on agreeing a transitional UK-EU trade period following Brexit.
Speaking at their annual dinner SMMT President Tony Walker said such a period "should be on the current terms and, crucially, not time-limited".
The UK automotive sector is worth about £14.6bn a year to the UK economy and employs 162,000 people.
"Like every other industry, we need certainty now," added Mr Walker.
Addressing more than 1,100 industry leaders, government representatives and other stakeholders, he said that while Prime Minister Theresa May had embraced the need for a period of transition to avoid a post-Brexit cliff edge, "we need to see concrete progress – and quickly".
Mr Walker also said that consumer confidence had already fallen, leading to a downturn in sales, with "uncertainty about Brexit" taking its toll.
He said a "hard Brexit" would further undermine the UK car industry's achievements of the past 25 years.
"The risk comes not just from costly WTO tariffs – which would add at least £4.5bn to the industry's annual overheads – but also from the imposition of customs checks, red tape and fees on goods that currently move friction free across borders," he said.
"Every day, more than 1,100 trucks for UK car plants cross into the UK from the continent – the vast majority without being checked at customs – to deliver some £35m worth of components to UK vehicle and engine plants.
"And every day, these components help build 6,600 cars and 9,800 engines – the bulk of which are then shipped back to EU customers and assembly plants."
UK vehicle sales fell by more than 12% in October, marking the seventh consecutive month of declines.
The SMMT blamed a drop in business and consumer confidence for the fall.
So far this year, new vehicle registrations are down by 4.6%.