UK, EU car makers warn of €110bn no deal ‘Brexit disaster’

Brussels – A grouping of 24 European automotive associations have called for an “urgent agreement” on a free trade deal between the EU and the UK, just 15 weeks before the end of a Brexit transition period.

The UK exited the EU in January this year, with a one-year transition period to work out a trade deal between the two sides.

Without a deal in place by 31 December, both sides will be forced to trade under so-called World Trade Organisation (WTO) non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks.

In a 14 Sept joint statement, the organisations said new calculations showed that enforcing WTO tariffs would impact the production of 3 million EU and UK-built vehicles over the next five years.

No deal Brexit, the statement said, would mean combined EU-UK trade losses worth up to €110 billion to 2025, with losses worth €52.8 billion to UK plants and €57.7 billion to those based across the EU.?

In addition to that, automotive suppliers will also be impacted by the charges, the statement added.

“Negotiators on both sides must now pull out all the stops to avoid ‘no deal’ at the end of the transition, which… [will put] jobs at risk in a sector that supports 14.6 million livelihoods,” said the statement.

A no-deal Brexit, the organisations warned, will be a “second devastating hit” on top of around €100 billion worth of production lost so far this year due to the coronavirus crisis.

Before the Covid pandemic, production of motor vehicles in the EU and the UK was running at 18.5 million units a year.

This year, some 3.6 million units have been lost across the sector due to the pandemic, the statement noted.

Collectively, the EU27 and UK automotive sector is responsible for 20% of global motor vehicle production and spends some €60.8 billion on innovation per year, making it Europe’s largest R&D investor.

The European Automobile Manufacturers Association (ACEA), the European Association of Automotive Suppliers (CLEPA), the UK's Society of Motor Manufacturers and Traders (SMMT) and the German Association of the Automotive Industry (VDA) were some of the leading signatories of the statement.