Why EU motoring bodies are lobbying against a no-deal Brexit

The European Union’s major motoring bodies have united in an “unprecedented condemnation” of a no-deal Brexit and the impact it would have on the automotive industry.

A joint statement from the UK’s Society of Motor Manufacturers and Traders (SMMT), the European Automobile Manufacturers’ Association (ACEA) and 21 other automotive organisations warns that consumers may bear the brunt of extra yearly costs totalling £5bn if higher export tariffs are introduced post-Brexit, Auto Express reports.

The industry said that it fears “catastrophic” and “irreversible” damage will be caused if Britain leaves the EU without a deal next month, the motoring magazine said.

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SMMT chief Mike Hawes said the European car sector is “deeply integrated”, where “free and frictionless trade” has helped the industry become one of the continent’s “most valuable assets”.

The warning comes after repeated promises from Prime Minister Boris Johnson to bring the UK out of the EU on 31 October “with or without a trade deal with Brussels”, The Guardian reports.

How will a ‘no-deal’ Brexit impact the industry?

The paramount issue outlined by the motoring bodies centres around frictionless trade.

Currently, car manufacturers are able to quickly and freely move parts between the UK and mainland Europe. The Daily Telegraph says that companies operating in the UK rely on “highly tuned supply chains” that import parts on a “‘just-in-time’ basis”.

Some 1,100 trucks arrive from mainland Europe every day carrying “components to feed automotive factories”, the newspaper says. Any disruption to the supply line could wreak havoc on a company’s operation.

The joint statement from the 23 motoring organisations warns that a no-deal Brexit may lead to greater border checks, harming the just-in-time “operating model”, as well as the introduction of higher World Trade Organization (WTO) tariffs that could add £5bn per year to exports leaving the UK for the EU, Autocar reports.

What do the motoring organisations say?

Given that Britain’s motoring sector is “largely foreign-owned”, the Guardian says, the European motoring bodies fear that a hard Brexit will have a significant impact on both manufacturing and the consumer.

“Barrier-free trade is crucial for the continued success of the deeply integrated European auto industry, which operates some 230 assembly and production plants right across the EU,” said ACEA secretary general Erik Jonnaert.

“Brexit will have a significant negative impact on the automotive sector and a ‘no deal’ Brexit would greatly exacerbate those consequences, causing massive disruptions to an industry which is so vital to Europe’s economy,” he added.

Meanwhile, Gianmarco Giorda, director at Italy’s Associazione Nazionale Filiera Industria Automobilistica (ANFIA), claims that higher tariffs will drive up vehicle costs, impacting both customers in the UK and in mainland Europe.

Sigrid de Vries, secretary general at the European Association of Auto Suppliers (CLEPA), argues that a deal is vital for the UK and the EU to maintain their positions in the global market.

A deal would, therefore, help “drive future innovation, benefitting consumers, societies and economies right across Europe”, she said. “With so much at stake, it is in the interest of all parties to avoid a ‘no deal’ Brexit and deliver a managed withdrawal of the UK from the EU.”