European automotive trade associations call for action against no-deal Brexit

23 September 2019 Ian Fletcher

(Excerpt)

Trade associations representing the interests of the automotive industry in Europe have joined forces to call for action to prevent the UK leaving the European Union (EU) without a deal on 31 October. The statement was published on the website of the European Automobile Manufacturers' Association (Association des Constructeurs Européens d'Automobiles: ACEA), and has the backing of the European Association of Automotive Suppliers (CLEPA) and 21 national associations, many of which have voiced their concerns about the impact that it would have on the industry across the region.

For the automotive industry in the EU - which ACEA points out produces 19.1 million vehicles and employs 13.8 million people - a no-deal Brexit would be highly disruptive. ACEA has again underlined many of the issues that it would face due to the change in trading conditions, with billions of euros of tariffs, which could reach EUR5.7 billion for cars and light commercial vehicles (LCVs) under World Trade Organization (WTO) rules to the trade bill between the two markets. This would result in price increases if OEMs cannot absorb costs. Furthermore, the additional border checks will hit the just-in-time operating model, with the cost of one minute of production stoppage in the UK alone said to amount to EUR54,700. It also notes that production in the UK will no longer benefit from being party to EU trade agreements and preferential arrangements with some 30 countries, including Turkey, South Africa, Canada, Japan and South Korea, while 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. On a wider scale, the UK's departure also highlights that it would immediately make the EU market smaller, and potentially less attractive to international trade partners.