Currently reading: EU automotive bodies call for urgent post-Brexit trade deal
SMMT and its European counterparts warn that WTO tariffs could stifle demand and production
Felix Page Autocar writer
News
3 mins read
14 September 2020

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.

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“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.”

Read more

The UK car industry's 2021 Brexit timebomb

SMMT boss: 11,000 UK automotive job losses “the tip of the iceberg​"

The car industry now: will Brexit's impact now be even greater?​

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Comments
8

14 September 2020
Lol, the Brexit dividends :))

14 September 2020

Manufacturers are using Brexit as an excuse to raise prices, but guess what, the public are not mugs, manufacturing and sales are down due to covid, if these companies want to continue to exist, price hikes are not the way to do it,  VW are the biggest supplier of vehicles to the UK, they looking for any excuse to claw back the billions they have been fined and half its board could be going to prison, more fines are on the way and more class actions, go no VW put up your prices. I suspect non EU based manufacturer are happy to pick up the slack.  

14 September 2020

Seem  like you don't know the difference between a price rise and a tariff.  And you are wrong about the public being mugs, they are mugs because they will pay the higher price anyway.

14 September 2020
Rtfazeberdee wrote:

Seem  like you don't know the difference between a price rise and a tariff.  And you are wrong about the public being mugs, they are mugs because they will pay the higher price anyway.

I know exactly what the  difference is, the manufacturers and some of the "badge buyers" perhaps dont, the rise in tarrifs could easily be covered by the manufacturer and not be passed on to the customer, and the manufacturer would still make a profit, because hardly anyone pay list price anyway, and lots of people are only purchasing through a lease/PCP or HP with a higher inflation rate than that set by the Bank of England, a lower interest rate on any HP or lease agreement could effectively nullify any tariff, keeping monthly payments the same for the customer and still making the manufacturer money. 

14 September 2020

Not ewhen the Eu agreed zero tafiffs recently with Japan ,putting the final nail in the coffin for Honda Uk as they can import tariff free from Japan now ,did w esee a reduction in prices of Japanese built cars,I think you all know the answer.So the tariiffs in my opinion should be retainedin this example.

14 September 2020

 The Country is in a deep enough hole as it is, most of us know, instead of some who have the blind belief that everything is going to be rosy in a year or two, when really it's going to make it harder for our kids to get a job,have there own home, run a car maybe, David Cameron put us in this hole and then resigned, what confidence did that give?

14 September 2020

Surely if there's a no deal Brexit the Pound will lose value by more than 10%, so any WTO tariffs of 10% on exports to mainland Europe will be effectively zero? The real problem comes with companies like Ford making all their vehicles in Euroland with an increased value of the Euro & 10% import duty to their biggest export market, the UK, will effectively raise prices of their cars by 20%!!! So who is gonna lose out big time? If the British still continue buying BMW's & Mercs, the UK Government could use all the extra revenue from the WTO 10% tariff to prop up UK car maufacturing. If the German products become too expensive they'll have to import more cars from their American, South African or Chinese plants. (less jobs in the EU).

 

 

 

 

 

 

 tariff 

17 September 2020

Who knows what the future holds but there's one thing for sure, along with other remaoners, the SMMT don't seem to acknowledge there's a big world outside the EU.

How many times over the years have you read stories on here where Mike Hawes and and Co. have called for free trade deals with the rest of the world? You do realise that the cars we currently import from outside the EU are already subject to that 10% WTO tax? It's already been in place for years but nobody ever mentioned it. All of a sudden, it's now a problem. Jeez.

I really dislike Trump, but there is one thing I agreed with him on ( the only thing I agree with him on! ) Car imports from the USA to the EU are, or at least were, subject to a 10% tax whereas EU built cars are subject to 0% tax when entering the USA. What happened to the WTO rules there? because that's totally unfair on the Americans.  Last I heard the EU/US were renegotiating that deal - not sure if a fairer agreement is already in place. What it does show tho is that these WTO rules only apply when it suits.

I fail to understand how the rest of the world manage to trade with each other. Motor vehicles are built all over the world, they're sold all over the world, but apparently it's only the UK who's going to have a problem with trade. Talk about remoaners having tunnel vision !   

 

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