The EU automotive industry produces over 19m vehicles each year © Getty Images/iStockphoto
The EU automotive industry produces over 19m vehicles each year © Getty Images/iStockphoto

No-deal Brexit will have ‘seismic’ impact on car industry

23 September 2019

Delays to just-in-time supply chain models caused by a no-deal Brexit could cost the UK £50,000 per minute, the automotive industry has warned.

Organisations representing vehicle and parts manufacturers across the EU said the repercussions of a no-deal Brexit on the automotive sector would be severe. 

The UK’s departure from the EU without a deal would trigger a “seismic shift in trading conditions” while billions of Euros worth of tariffs threaten to impact consumer choice and availability, the organisations said in a joint statement. 

An end to barrier-free trade could bring “harmful disruption” to the industry’s just-in-time operating model. The Society of Motor Manufacturers and Traders (SMMT) estimated just one minute of production stoppage caused by delays at ports could cost £50,000 (€54,700) in the UK alone.

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The joint statement added World Trade Organization tariffs on cars and vans, which would be automatically applied if no deal is reached, could add £5bn (€5.7bn) to the collective EU-UK auto trade bill, which would raise prices for customers if manufacturers cannot absorb the additional cost. 

“Automotive manufacturers 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,” it said. 

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

Mike Hawes, chief executive of the SMMT, said: “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.”

The EU’s automotive industry produces 19.1m vehicles each year and employs 13.8m people across the wider sector, representing approximately one in 16 of the EU's workforce.

Alongside the CCFA and SMMT, signatories of the statement included The European Automobile Manufacturers Association, European Association of Automotive Suppliers and 19 national associations.

Meanwhile, the manufacturing industry body Make UK warned of the impact of a hard Brexit on economically disadvantaged areas in the UK. 

In Wales, the EU is the main export market, making up almost two thirds of exports, while EU exports represent 60% of the total in the North East and Yorkshire and Humber. As areas with a very high exposure to trade with the EU, the risks of no deal are likely to be felt disproportionately by these areas in particular.

Stephen Phipson, CEO of Make UK, said: “Although Brexit stockpiling put manufacturing on steroids for a little while, the industry has since gone almost cold turkey and the overall picture over the last year now shows Brexit, global trade wars and the economic downturn in major markets are menacing UK manufacturers. 

“In particular, there are some regions of the UK with a very high exposure to trade with the EU and who are likely to suffer a disproportionate double whammy to their economies and jobs from a damaging no-deal exit.” 

A report by the charity Sustain has expressed concern about the impact of no-deal on food aid provided by charities, poverty and health groups and public sector food organisations such as schools and care homes. 

Fresh food shortages, delays caused by border checks and freight traffic congestion, unpredictable availability of ingredients in manufactured foods, and increased costs for food could greatly increase food insecurity for millions of vulnerable people in the UK, it said.

Sustain urged the government to provide extra funding to charities, food banks and schools to ensure food availability. 

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