Hard Brexit May Set Back UK Motor Industry 25 Years

European car manufacturers and parts suppliers have given a dire warning to the British that if there is a hard Brexit it may set the UK motor industry back 25 years.

The warnings came from the European Automobile Manufacturers' Association, European Association of Automotive Suppliers, Brembo Brakes and BMW

They are contending that a No-deal Brexit will cause disruption for deliveries made by thousands of trucks delivering car components from across the EU to the UK every day which could result in delaying production schedules costing businesses and even worse passing on the 10% tariffs applied to cars directly on to the customers.

Due to the potential negative outcome of a hard Brexit, the leading European car makers and parts suppliers are urging the UK and the EU to reach an agreement at a summit in Brussels, as a no-deal Brexit could be catastrophic for the motoring industry.

At the moment, the automotive industry relies heavily on frictionless trade between Britain and the Continent. A management board member at Brembo and president of CLEPA, Roberto Vavassor hinted at the collapse of Britain's auto sector in the 1990s caused by the decline of British Leyland and its successor Rover Group. He said it was International investment f that helped the UK's motor industry recover to the point where it is today.

“If we are continuing to be taken hostage by this situation, the flourishing UK auto industry could come back to the situation it was at 20 to 25 years ago.”

The ACEA (European Automobile Manufacturers' Association) said 'no amount of contingency planning can realistically cover all the gaps left by the UK's withdrawal from the EU. This

This UK organisation represents the 15 largest Europe-based car, van, truck and bus makers. They said that car manufacturers in the UK and Europe rely on a 'just-in-time' or 'just-in-sequence' delivery and production process, where parts are constantly in transit in the knowledge that they can be delivered without delay.

1,100 EU trucks carrying needed automotive components cross the English Channel every day and any kind of hold-up at customs could cause enormous logistical issues, leading to disruptions to production schedules. The secretary general of the ACEA, Erik Jonnaert, said:

“Our members are already making contingency plans and are looking for warehouse spaces to stockpile parts.

“However, the space required to stockpile for more than a short time would be absolutely huge and expensive."

Mr Jonnaert also warned that the customers would be heavily impacted by a no-deal Brexit.

With a 10 per cent tariff applied to all cars traded between the UK and the EU as part of World

Trade Organisation agreements, manufacturers are most likely to pass these additional costs directly to motorists.

“We cannot forget that profit margins in our industry are significantly lower than 10 per cent,' he said.

“At the end of the day, these extra costs will either be passed on to the consumer or will have to be absorbed by the manufacturers.

“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.”

EU leaders' had hoped to reach a provisional Brexit deal this week before signing off on a withdrawal agreement at a special Brexit summit in November, but the talks have stalled over the issue of a hard border between Northern Ireland and the Republic.

It is estimated that only 10 per cent of British automotive suppliers and 41 per cent of EU suppliers consider themselves well prepared for Brexit, with many having little or no experience of customs clearing.

Stephan Freismuth, customs manager at BMW, said that at the Channel tunnel and ports such as Dover there was no customs infrastructure and, in some cases, no space for trucks awaiting checks to park.

Author

Justin Kavanagh
Justin Kavanagh is a recognised leader in automotive intelligence and vehicle data supply to the entire motor industry. He has almost 20 years experience in building systems from the ground up. As the Managing Director of Vehicle Management System, he understands the need and importance of trustworthy and reliable vehicle history and advice to both the trade and the public.
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