A conglomeration of European automotive trade bodies, including Britain’s Society of Motor Manufacturers and Traders (SMMT), has called for the UK and European Union to secure a post-Brexit free trade agreement “without further delay”.
The joint announcement comes 15 weeks before the 31 December, the expiry date of the two-year transition period. By that point, a trade deal must be agreed upon to avoid a no-deal Brexit, which the bodies say would cost the EU automotive sector €110 billion (£101.7bn) in lost trade over the next five years.
The SMMT has long been vocal about the need for a trade deal, and it has now been joined in its calls by the European Automobile Manufacturers Association (ACEA), the European Association of Automotive Suppliers (CLEPA) and 20 other national automotive industry bodies, including the German Verband der Automobilindustrie (VDA) and French Comité des Constructeurs Français d’Automobiles (CCFA).
They warn that the sector, which employs some 14.6 million people across the continent and accounts for 20% of global automotive production, could face “severe repercussions”, adding to the approximately €100bn (£92.5bn) worth of losses brought about by the coronavirus pandemic.
The announcement states: “Any deal should include 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.
“Crucially, businesses need detailed information about the agreed trading conditions they will face from 1 January 2021 to make final preparations.”
Without a deal, the UK will trade with the EU according to World Trade Organisation (WTO) rules, which impose a 10% tariff on cars and up to 22% on commercial vehicles. This, the trade bodies warn, would drive up prices for consumers, reduce choice and lead to a downturn in demand.
Vehicle production would also become a more expensive process, with each component costing more to import from the EU into the UK.
According to the trade associations, EU automotive production is down 3.6 million units on 2019 as a result of the pandemic. A 10% WTO-imposed tariff could, they warn, cost another three million units over the next five years.
UK factories would stand to lose a collective €52.8bn (£48.8bn) and their EU counterparts some €57.7bn (£53.3bn), they say.
SMMT chief executive Mike Hawes 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’s too late.”