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European automotive industry unites against no-deal Brexit

Car factory production line

The European automotive industry has made a united call for the UK and the EU to avoid a ‘no deal’ Brexit, fearing it will cause mass disruption and increase the cost of cars.

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 Society of Motor Manufacturers and Traders (SMMT), joined forces to stress the impact a ‘no deal’ Brexit would have on car makers.

Mike Hawes, SMMT chief executive, said, “European Automotive is deeply integrated and the benefits of free and frictionless trade have helped our sector become one of Europe’s most valuable assets, delivering billions to economies and supporting millions of livelihoods across the EU.

“A ‘no deal’ Brexit would have an immediate and devastating impact on the industry, undermining competitiveness and causing irreversible and severe damage. UK and EU negotiators have a responsibility to work together to agree a deal or risk destroying this vital pillar of our economies.”

The automotive industry is one of the EU’s biggest contributors to growth and wealth, producing 19.1 million vehicles per year and employing 13.8 million people across the wider sector.

European industry chiefs warned that 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. 

The end of barrier-free trade could disrupt the industry’s just-in-time operating model, with the cost of just one minute of production stoppage in the UK alone amounting to £50,000.

Reverting to world trade organisation (WTO) tariffs on cars and vans could add £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.

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.”

Erik Jonnaert, ACEA secretary general, added, “Barrier-free trade is crucial for the continued success of the deeply integrated European auto industry, which operates some 230 assembly and production plants right across the EU. Brexit will have a significant negative impact on the automotive sector and a ‘no deal’ Brexit would greatly exacerbate those consequences, causing massive disruptions to an industry which is so vital to Europe’s economy. Even the repeated need to plan and implement contingency measures to deal with a disorderly Brexit is highly disruptive to our members. The European automobile industry therefore calls for all sides to rule out a ‘no deal’ scenario as soon as possible.”

Car factories across UK are already suffering from the dramatic fall in investment as a result of a potential no-deal Brexit. Honda has confirmed that it will close its sole UK car factory in Swindon, with the loss of 3500 jobs from 2021, when the current lifecycle of cars like the Civic produced there come to an end.

Nissan has also decided not to build the next X-Trail in the UK, reversing a 2016 pledge to build the seven-seater SUV in its Sunderland factory in the north-east.

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