No-deal Brexit and Kovid threaten ‘double whammy’ for car industry

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PA Media

UK and European carmakers have warned that a no-deal Brexit could hit the £ 100bn dent in the region’s car industry over the next five years, adding to the already huge losses caused by the Kovid-19.

A letter signed by 23 trade groups across Europe requests the government to strike a deal for World Trade Organization (WTO) rules by default.

It says that without one, there will be a “catastrophic” increase in tariffs.

A government spokesman said it was “working hard” to reach an agreement.

SMMT said the industry has already taken a £ 90bn hit this year due to the Kovid-19.

Britain left the European Union on 31 January, but will enjoy tariff-free trade with the bloc by the end of the year as part of the transition period.

But fears are growing that the two sides will be unable to strike a long-term trade deal by then.

The European Automobile Manufacturers Association (ACEA), which wrote the letter, said that achieving a trade agreement by January should be a “complete” for firms on both sides of the channel.

“Otherwise our region – already recovering from the Kovid crisis – will suffer a double whammy,” Director-General Eric-Mark Huitema said.


Mike Hayes, head of the UK Society of Motor Manufacturers and Traders (SMMT), said a trade deal was important because UK and EU industries were so integrated.

“These figures portray a blurry picture of the catastrophe that would follow ‘No Deal’ Brexit,” he said.

“The shock of tariffs and other trade barriers will reduce the damage already caused by a global epidemic and recession, putting businesses and livelihoods at risk.”

Industry associations on the continent, including Germany, France, Ireland, the Netherlands, Belgium, Sweden, Denmark, Italy, Portugal and Eastern Europe, also say they fear job losses in their own countries.

Under the terms of the World Trade Organization, the export of cars will face a 10% tariff, rising to 22% for vans and trucks.

This will affect the margins of car manufacturers and increase in demand will increase tariffs on consumers. Automotive suppliers and their products will also be affected.

SMMT said it could lose £ 49bn for UK car plants by 2025 and £ 52bn for those in the European Union.

It is a free trade deal that will also apply to alternatively fueled vehicles and car components and will “include zero tariffs or quotas”.

A government spokesman said: “We want to reach a free trade agreement with the European Union that is based on precedent and recognizes the core principles of our position as an independent, sovereign country.

“We are committed to working hard to reach an agreement by mid-October, and we look forward to the ongoing discussion this week.

“At the same time, we are engaging extensively with the automotive industry as to how they can prepare for business changes at the end of the transition period when we leave the single market and the customs union.”