A ‘no-deal’ Brexit would be “catastrophic”, say European car bosses

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Author: | Updated: 23 Sep 2019 11:44

The European automotive industry has made a rare joint call for the UK and the European Union to avoid a “catastrophic” ‘no deal’ Brexit.

British prime minister Boris Johnson has vowed to leave the EU on 31 October, whether a trade deal has been agreed with Brussels or not – a situation that European industry chiefs claim would “trigger a seismic shift in trading conditions”.

The automotive industry is one of the EU’s biggest success stories, producing 19.1 million vehicles a year and employing 13.8 million people across the wider sector. However, in the event of ‘no deal’, the application of WTO tariffs on cars and vans could mean €5.7bn bill for EU/UK industry and consumers.

Meanwhile, 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 €54,700 (£50,000).

UK car plant

In their joint statement, bosses from 23 European automobile associations said they 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.

SMMT

France

Christian Peugeot, president of the Committee of French Automobile Manufacturers, 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.”

Luc Chatel, president of the French Association of the Automotive Industry, said, “Brexit will have a huge impact on the whole automotive sector in France, on manufacturers as well as on suppliers. The impact will be direct in terms of tariffs, customs procedures, logistics, industrial localisation decisions, etc. And there will also be an indirect impact, as for all economic sectors, because of the foreseeable downturn in the European growth.”

Germany

Bernhard Mattes, president of the German Association of the Automotive Industry, 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.”

Spain

Mario Armero, executive vice president of the Spanish Association of Car and Truck Manufacturers, 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.”

Portugal

Gianmarco Giorda, director of the Portuguese Manufacturers Association for the Automotive Industry, 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.”

Sweden

Mattias Bergman, chief executive of the Swedish Association of Automobile Manufacturers and Importers, said, “Sweden and our automotive industry is a strong believer in free trade where a barrier-free market is crucial for the automotive industry to continue to contribute to society and economic growth within Europe. Brexit by itself is negative for the industry and a ‘no deal’ will add substantial risk and will have large negative impact on not only the industry, but the entire Europe.”

Poland

Alfred Franke, president of SDCM, the Polish Association of Automotive Parts Distributors and Producers, said: “A ‘no deal’ Brexit plus troubling symptoms of a slowing world economy, global trade tensions between United States and China as well as challenges facing our industry could lead to serious downturn in European automotive industry – one of the most important industries in the EU. Therefore, every effort should be made to ensure that the UK’s exit from the European Union is preceded by an appropriate deal that will protect us from a potential catastrophe.”

UK

Mike Hawes, Society of Motor Manufacturers and Traders 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.”

Jaguar Land Rover production facility

European manufacturers

Erik Jonnaert, secretary general of the European Automobile Manufacturers Association, said: “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.”

European suppliers

Sigrid de Vries, secretary general of the European Association of Automotive Suppliers, 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.”

Fredrik Sidahl, chief executive of the Scandinavian Automotive Supplier Association, said: “The EU with the base foundation of peace has over the years become a true region of automotive industry. For Sweden as a part of EU and extremely dependent on export, EU is the main market. Among all the states in EU, the UK is one of our core individual markets for vehicles and components and we must, with all means avoid a hard Brexit both for Sweden but also for Europe. Automotive and the flow of parts and research programs are linked together, and a divorce between the UK and EU will dramatically change this for the worse.”

Motor industry employees currently account for 6.1% of total EU employment.

More automotive-related Brexit news can be found here.

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