There are potentially disastrous implications for the automotive supply chain in Brexit, say car makers.
Just a few days ahead of the EU summit, where the 27 heads of state will approve the European Council’s Brexit guidelines, the European Automobile Manufacturers’ Association (ACEA) is calling on the negotiators to pay urgent attention to sector-specific issues.
A big concern for the industry is whether cars approved by UK authorities will still be able to be sold in the EU after Brexit, and vice versa. EU law requires that cars are tested by a national technical service to verify compliance with EU environmental, safety and security standards, before they can be put on the market anywhere in the European Union – the so-called ‘type approval’ system.
“It is essential that manufacturers can maintain valid type approvals in both the EU and the UK as of 30 March 2019, no matter where the approval was issued,” stated ACEA Secretary General, Erik Jonnaert.
“We are therefore calling on the European Commission to clarify how existing approvals can be transferred from an EU27 authority to the UK, and the other way around.” ACEA also recommends that the EU and the UK mutually recognise each other’s vehicle approvals after Brexit – something which would only be possible if the UK remains fully aligned with all relevant EU legislation.
Another major question mark is whether the UK car market, the second biggest in the EU, will still count for reaching the 2021 CO2 targets. To monitor compliance with these targets, the CO2 performance of new cars is being tracked using registration data from all EU countries, including the UK. Once the UK leaves the EU however, it will no longer be subject to the CO2 targets. In theory, the requirement to include UK data in the fleet CO2 calculations will then also expire.
Jonnaert said,“Excluding UK data from the CO2 calculations would leave very limited time for the industry to readjust compliance strategies for reaching the stringent 2021 targets.” ACEA’s first priority is therefore to keep the system as it is today, with overall fleet compliance being based on CO2 data from the 27 EU member states, plus the UK.
Furthermore, given that the business operations of the auto industry are based on smooth ‘just-in-time’ and ‘just-in-sequence’ deliveries, any new customs checks as a result of Brexit would add cost, cause delays and threaten productivity. In the worst-case scenario, they could even lead to assembly line stoppages. “The UK deciding to remain in a customs union with the EU would of course be an effective solution to enable frictionless trade in goods between the EU and UK,” Jonnaert explained.
“But, regardless of which Brexit scenario is pursued, it is essential that EU and UK authorities already now start preparing to simplify customs procedures and to reinforce their customs capacity. Otherwise we will see severe land and sea-port congestion at both sides of the Channel once the UK leaves the EU.”
Lastly, the potential application of tariffs of 10% for passenger cars and 10% or 22% for commercial vehicles in a so-called ‘cliff-edge’ scenario would be extremely burdensome for automobile manufacturers and consumers alike.