Twenty three European automotive industry leaders are calling on the EU and UK to “pull out all the stops” to avoid a no-deal Brexit and secure a free trade agreement (FTA) or face “devastating” trade and job losses across the sector.
The group, which includes the European Automobile Manufacturers Association (ACEA), the Society of Motor Manufacturers and Traders (SMMT) and the German Association of the Automotive Industry (VDA), warned this week that a no-deal Brexit will cost the pan-European automotive sector around €110bn in lost trade over the next five years in a sector which provides one in 15 jobs in the EU and UK.
The group is warning that failure to agree a free trade deal, on top of the impact of the Covid-19 pandemic, could devastate the industry on both sides of the channel.
If the UK crashes out of the EU without a deal, World Trade Organisation (WTO) non-preferential rules will kick in from 1 January next year, including a 10% tariff on cars and up to 22% on vans and trucks.
The group points to research showing that the 10% WTO tariff could wipe some three million units from EU and UK factory output for cars and vans over the next five years, with losses worth €52.8bn to UK plants and €57.7bn to those based across the EU.
“This combined loss in trade value would seriously harm revenues for a sector that is one of Europe's most valuable assets, employing millions of people and generating shared prosperity for all, with a combined trade surplus of €74bn with the rest of the world in 2019," it said.
“Collectively, the EU27 and UK automotive sector is responsible for 20% of global motor vehicle production and spends some €60.8bn on innovation per year, making it Europe's largest R&D investor.”
The group is calling for a free trade deal which includes zero tariffs and quotas, appropriate rules of origin for both internal combustion engine and alternatively fuelled vehicles, plus components and powertrains, and a framework to avoid regulatory divergence.
It added: “Crucially, businesses need detailed information about the agreed trading conditions they will face from 1 January 2021 to make final preparations.
“This, combined with targeted support and an appropriate phase-in period that allows for greater use of foreign materials for a limited period of time, will ensure businesses are able to cope with the end of the transition period.”
Mike Hawes, SMMT chief executive, said: “These figures paint a bleak picture of the devastation that would follow a 'no deal' Brexit.
“The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk.
“Our industries are deeply integrated so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity, and pull out every single stop to secure an ambitious free trade deal now, before it is too late."
Eric-Mark Huitema, ACEA director general, said: "The stakes are high for the EU auto industry – we absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector – already reeling from the Covid crisis – will be hit hard by a double whammy."