Europe’s leading automotive industry representatives have warned of the adverse consequences for the region’s industry in the event of a ‘no-deal’ Brexit.
In an unprecedented move, the region’s national automotive trade associations united to warn that the imposition of WTO tariffs under no-deal would add an almost EUR6bn bill for industry and consumers, while supply chains would also be disrupted due to extra border checks.
Go deeper with GlobalData
The UK is scheduled to leave the EU on October 31st, but the terms of the departure are not yet finalised. If the UK leaves the trade bloc without an agreement with the EU, trade terms on UK-EU shipments revert to third country WTO rules – with new tariffs and border checks imposed on UK exports to the EU (with the likelihood of reciprocal tariffs in the other direction also).
The lead organisations representing vehicle and parts manufacturers across the EU, the European Automobile Manufacturers Association (ACEA) and European Association of Automotive Suppliers (CLEPA), as well as 21 national associations, including the Committee of French Automobile Manufacturers (CCFA), the German Association of the Automotive Industry (VDA), and the Society of Motor Manufacturers and Traders (SMMT), joined forces to stress the impact a ‘no deal’ Brexit would have on one of Europe’s most valuable economic assets.
In a statement the organisations said billions of euros of tariffs threatened to impact consumer choice and affordability on both sides of the English Channel. They also said 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 EUR54,700. They said WTO tariffs on cars and vans could add EUR5.7bn to the collective EU-UK auto trade bill, raising prices for customers if manufacturers cannot absorb the additional cost. Automotive manufacturers, they said, 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’.
See Also:
Christian Peugeot, CCFA President, said: “Brexit is not just a British problem, we are all concerned in the European automotive industry, and even further. Be it as exporters to the UK market or producers locally, which we are both, we will inevitably be negatively affected.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataBernhard Mattes, VDA President, said: “We regret Brexit. The United Kingdom is a fully integrated player in the value chain of the German automotive industry. More than 100 production facilities as well as research and development located in the UK prove our commitment to the UK-market as a number one market in the EU. In the view of the German automotive industry, therefore, everything has to be done to maintain the free movement of goods, of services, the freedom of capital and the freedom of movement for workers between the UK and the EU. At the same time, we acknowledge that the internal market and the cohesion of EU27 are a priority and a pre-condition.
“The EU and UK automotive industry need frictionless trade and would be harmed significantly by additional duties and administrative burden on automotive parts and vehicles. Consequently, the UK and the EU should undertake all necessary steps to avoid a ‘no deal’ Brexit.”
Sigrid de Vries, CLEPA Secretary General, said: “The European automotive industry is operating highly integrated global supply chains. 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.”
A ‘no deal’ Brexit would also 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, and content from UK suppliers would no longer contribute to EU originating content for the purposes of rules of origin. This will potentially make it harder for European manufacturers to access the preferential terms of agreed EU trade deals. In addition, a ‘no deal’ Brexit would immediately make the EU market smaller, and potentially less attractive to international trade partners, the trade associations noted.
They also said 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, the trade associations maintained.
Mario Armero, ANFAC Executive Vice President, said: “Spain is mainly a net exporter of vehicles to the European Union. The Spanish automotive industry sells two-thirds of its production outside our frontiers. The United Kingdom is one of the main markets for these sales and, since Brexit was voted, exports have fallen exponentially. The establishment of tariffs and trade barriers worries us and harms the competitiveness of our factories and the development of our highly integrated supply chains. A ‘no deal’ Brexit will further worsen this trade and harm the entire production chain, in Spain and in Europe.”
Gianmarco Giorda, ANFIA Director, said, “The UK is the third destination market for parts and components for motor vehicles and the fourth for cars, therefore, it is relevant for the Italian industry, especially for component suppliers who represent an important interlocutor for the local manufacturers. The introduction of new customs tariffs, longstanding procedures and so higher prices could only have a devastating effect on the automotive industry, both for the Italian and for the British ones.”
Claude Cham, FIEV President, said: “At a time when the global economy is slowing down with volume decrease in our industry; and our entire eco-system is focused on the major challenge with new mobility, the ‘no deal’ Brexit would bring significant loads without values, ??neither for the states nor for the citizens nor for industries. Common sense tells that global competitiveness is directly linked to the size of a market of which the United Kingdom in the EU is of prime importance. This is even more important for the United Kingdom itself, which would be de-facto relegated out of one the world’s largest markets. The ‘no deal’ Brexit will also directly affect Europe’s ability to respond to its own environmental challenges and its global leadership on the issue by weakening its domestic market irrigated by its strong internal market.”
See also: No-deal Brexit would force new look at Japan’s ’40-year bet on UK’ – report
The 23 Automotive Association signatories include:
- ACAROM – The Romanian Association of Automotive Manufacturers www.acarom.ro
- ACEA – European Automobile Manufacturers Association www.acea.be
- AFIA – Portuguese Manufacturers Association for the Automotive Industry www.afia.pt
- AIA – Czech Automotive Industry Association www.autosap.cz
- ANFAC – Spanish Association of Car and Truck Manufacturers www.anfac.com
- ANFIA – Italian Association of the Automobile Industry www.anfia.it
- AUTIG – Danish Automotive Trade & Industry Federation www.autig.dk
- BIL SWEDEN – Swedish Association of Automobile Manufacturers and Importers www.bilsweden.se
- CCFA – Committee of French Automobile Manufacturers www.ccfa.fr
- CLEPA – European Association of Automotive Suppliers www.clepa.eu
- FEBIAC – Belgian Federation of Automobile and Motorcycle Industries www.febiac.be
- FIEV – French Federation of Vehicle Equipment Industries www.fiev.fr
- FKG – Scandinavian Automotive Supplier Association www.fkg.se
- FFOE – Austrian Association of the Automotive Industry www.fahrzeugindustrie.at
- ILEA – Luxembourg Automotive Suppliers Association www.ilea.lu/
- OSD – Turkish Automotive Manufacturers Association www.osd.tr
- PFA – French Association of the Automotive Industry www.pfa-auto.fr/
- SDCM – Polish Association of Automotive Parts Distributors and Producers www.sdcm.pl
- RAI – Dutch Association for Mobility Industry www.raivereniging.nl
- SMMT – Society of Motor Manufacturers and Traders www.smmt.co.uk
- SERNAUTO – Spanish Association of Automotive Suppliers www.sernauto.es
- TAYSAD – Automotive Suppliers Association of Turkey www.taysad.org.tr
- VDA – German Association of the Automotive Industry www.vda.de
