Automotive industry calls for avoidance of a no-deal Brexit

23 September 2019

Automotive industry calls for avoidance of a no-deal Brexit

23 September 2019

As the UK prepares to leave the European Union on 31 October, the European automotive industry has today made a united call for the UK and the EU to avoid a no-deal Brexit.

The lead organisations representing vehicle manufacturers and automotive suppliers across the EU, including the European Automobile Manufacturers Association (ACEA) and European Association of Automotive Suppliers (CLEPA), as well as 21 national associations, have joined forces to stress that the impact of a no-deal Brexit would be severe. The national associations include the Committee of French Automobile Manufacturers (CCFA), the German Association of the Automotive Industry (VDA), and the Society of Motor Manufacturers and Traders (SMMT).

Seismic shift

‘The UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of Euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel,’ said ACEA.

ACEA also believes that ‘the end of barrier-free trade could bring harmful disruption to the industry’s just-in-time operating model, with the cost of just one minute of production stoppage in the UK alone amounting to €54,700 (£50,000).’

Furthermore, ACEA highlights that WTO tariffs on cars and vans could add €5.7 billion (£5 billion) to the collective EU-UK auto-trade bill, raising prices for customers if manufacturers cannot absorb the additional cost. Automotive manufacturers believe that such disruption and cost must be avoided, and that all effort should be made to deliver an orderly withdrawal of the UK from the EU.

Early in September, UN trade body Unctad warned that a no-deal Brexit would cost UK businesses at least $16 billion (€14.5 billion) in lost sales due to the imposition of tariffs on exports. By its calculations, UK car exporters would be the hardest hit, losing about $5 billion (€4.5 billion) in sales to the EU.

A no-deal Brexit would immediately result in the UK no longer being party to EU trade agreements and preferential arrangements with some 30 countries, including Turkey, South Africa, Canada, Japan and South Korea. This will potentially make it harder for European manufacturers to access the preferential terms of agreed EU trade deals.

‘A no-deal Brexit would immediately make the EU market smaller, and potentially less attractive to international trade partners,’ ACEA commented.

With the automotive industry within Europe underpinned by highly-integrated global supply chains. CLEPA secretary general Sigrid de Vries flagged that: ‘A single vehicle consists of around 30,000 parts many of which cross borders multiple times. Frictionless and tariff-free trade, as well as regulatory certainty, is vital. Brexit has a negative effect on all these aspects. Brexit, specifically a no-deal Brexit, will be seriously damaging to the supplier’s industry in Europe and the UK and must be avoided.’

Managed withdrawal

ACEA added that EU and UK automotive manufacturers need a Brexit outcome that maintains free and frictionless trade and allows them to continue to invest, produce and sell competitively, and that encourages cross-border technological collaboration.

‘This will drive future innovation, benefitting consumers, societies and economies right across Europe. With so much at stake, it is in the interest of all parties to avoid a no-deal Brexit and deliver a managed withdrawal of the UK from the EU,’ according to the association.