EU automotive industry issues Brexit “cliff-edge” warning

Brussels – European automotive manufacturers and suppliers have jointly issued a stark warning about the potentially far-reaching impacts of a no-deal Brexit.

Such an outcome, they said, “would threaten their very business model,” through which plants receive and fit millions of parts into vehicles every day.

To support ‘just-in-time’ and ‘just-in-sequence’ delivery and production, 1,100 EU trucks cross the Channel daily to deliver to car and engine plants in the UK alone.

The pressing concern is that after Brexit, hold-ups at customs will cause massive logistical problems, disrupting the production process and generating significant costs.

“Our members are already making contingency plans and are looking for warehouse spaces to stockpile parts,” stated Erik Jonnaert, secretary general of the European Automobile Manufacturers’ Association (ACEA)

“However, the space required to stockpile for more than a short time would be absolutely huge – and expensive,” said Jonnaert, noting that some ACEA members are also planning a temporary post-Brexit production shutdowns.

“But the harsh fact is that no amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms,” Jonnaert added in a 17 Oct joint statement.

ACEA, he added, is also concerned about the 10% tariff that would be applied under WTO rules to all cars traded between the EU and the UK.

“The clock is ticking, but it is not yet too late. That is why we are urging the negotiating teams on both sides to redouble their efforts to successfully conclude a withdrawal deal,” Jonnaert said.

Threat to suppliers

Likewise, Sigrid de Vries, secretary general, European Association of Automotive Suppliers (CLEPA) highlighted the need to secure frictionless trade in components that often cross borders multiple times in manufacturing processes.

“Any change in the level of integration of the value chain will have an adverse effect on the competitiveness of individual companies and the sector as a whole,” said de Vries.

Smaller companies in particular, he warned, lack the internal systems, IT platforms and staff to deal with customs declarations, tariff classification, customs valuation, or calculations based on content origin.

De Vries concluded: “It remains crucially important to provide clarity on the future relation with the UK as quickly as possible, starting with a withdrawal agreement so that a cliff-edge scenario can be avoided.”