There will be severe repercussions for the European motor industry if there is no free trade agreement Britain before the end of the year and motorists will have to pay more for models.
That’s the stark warning this week from the car makers’ body, ACEA, which includes the Society of Motor Manufacturers in Britain, who warned a disorderly future could cost over £101 Billion by 2025.
In a statement, the car makers said that negotiators on both sides must now pull out all the stops to avoid ‘no deal’ at the end of the transition, which according to new calculations would cost the pan-European automotive sector some €110 billion in lost trade over the next five years, putting jobs at risk in a sector that supports 14.6 million livelihoods, representing one in 15 of EU and UK jobs.
- EU and UK automotive leaders unite to call for urgent agreement of an ambitious free trade deal before the end of the transition period in just 15 weeks’ time.
- New calculations show the catastrophic impact of ‘no deal’ with WTO tariffs putting production of some 3 million EU and UK built cars and vans at risk over next five years.
- ‘No deal’ would mean combined EU-UK trade losses worth up to €110 billion to 2025, on top of around €100 billion in lost production value so far this year because of coronavirus crisis.
- To avoid second economic hit to sector employing 14.6 million people, industry calls for negotiators to secure a deal urgently that delivers zero tariffs, modern rules of origin and avoids different regulations across the channel.
The lead organisations representing vehicle and parts makers across the EU, the European Automobile Manufacturers’ Association (ACEA) and the European Association of Automotive Suppliers (CLEPA), along with 21 national associations, including the Society of Motor Manufacturers and Traders (SMMT), German Association of the Automotive Industry (VDA), Comité des Constructeurs Français d’Automobiles (CCFA) and La Plateforme automobile (PFA), are today warning that the sector could face severe repercussions.
Indeed, economies and jobs on both sides of the channel are at risk of a second devastating hit in the shape of no deal coming on top of around €100 billion worth of production lost so far this year due to the coronavirus crisis.
Without a deal in place by 31 December, both sides would 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.
Such tariffs – far higher than the small margins of most manufacturers – would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand.
Furthermore, automotive suppliers and their products will be hit by tariffs. This will make production more expensive or will lead to more imports of parts from other competitive countries.