European auto makers say ‘no-deal scenario’ with UK would ‘severely damage the industry’

The scale and ambition of the trade agreement that replaces the United Kingdom’s membership of the EU must reflect the deeply intertwined nature of the automotive sector, urges the European Automobile Manufacturers’ Association (ACEA). If not, this would not only severely damage the industry and the wider economy, but it could also hamper the roll-out of electric vehicles, according to ACEA.

Every year, almost three million motor vehicles worth 54 billion Euro are traded between the EU and the UK, and cross-Channel trade in automotive parts accounts for almost 14 billion Euro. With approximately 30,000 parts used in the construction of a single car, the automotive industry heavily relies on just-in-time manufacturing schedules.

“With this interdependence in mind, it is essential that tariff free trade and an open flow of goods and services are a cornerstone of the ongoing negotiations between the EU and the UK,” stated ACEA’s Director, Eric-Mark Huitema. “Any future trade agreement must therefore combine zero tariffs, workable rules of origin, simplified customs requirements and ensure the absence of technical barriers to trade.”

The rules of origin for motor vehicles should reflect the very high level of integration between the EU and the UK and the unique circumstance in which this negotiation is taking place, according to ACEA. Special consideration should also be given to the trade in batteries for electrified vehicles, given the lack of EU or UK battery manufacturing capacity.

“The clock is ticking for these complex negotiations, and we are very concerned that the time remaining under the transitional arrangement is insufficient, especially given the on-going COVID-19 crisis,” warned Huitema. The unintended consequence of this could be a no-deal scenario. In terms of tariffs alone, this would have a massive impact, with some 6 billion Euro being added to the cost of doing cross-Channel trade.

“Such an outcome would be catastrophic to the automotive sector, and to the European economy in general, and should be avoided at all reasonable cost.”