EU automotive leaders warn no-deal Brexit will be 'catastrophic' for car industry

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
A lorry with car carrier trailer leaves the Honda car plant in Swindon, Britain, February 18, 2019. REUTERS/Eddie Keogh

The powerful heads of Europe’s automotive industry have collectively warned that there will be catastrophic consequences for the entire European car industry if Britain leaves the European Union without a deal.

In a joint statement released Monday, heads of automotive associations from 23 countries, including the UK, appealed for barrier-free trade to continue, and stressed that should Britain leave the bloc a month from now and World Trade Organization (WTO) tariffs come into force, the industry will be badly damaged.

“The UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel,” they said in their statement.

“European Automotive is deeply integrated and the benefits of free and frictionless trade have helped our sector become one of Europe’s most valuable assets,” said Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, in the joint statement. “UK and EU negotiators have a responsibility to work together to agree a deal or risk destroying this vital pillar of our economies.”

READ MORE: UK car industry warns no-deal Brexit could cost manufacturers £50,000 per minute

As a whole, the European automotive industry produces more than 19 million vehicles a year and employs 13.8 million people. The SMMT estimates that delays to deliveries of car components along supply chains would amount to a gross value of £70m ($86m) a day based on five-day working week..

Christian Peugeot, head of the CCFA, France’s auto association stressed that Brexit is “not just a British problem,” noting that France both imports and exports to the UK and will “inevitably be negatively affected.”

Automotive supply chains are highly interdependent, and rely on last minute deliveries of components from one country to another to ensure car production runs faultlessly and as fast as possible. The automotive bosses pointed out today that a ‘no deal’ Brexit would mean the UK is immediately shut out of the EU’s trade agreements with some 30 countries, including Japan, South Korea, and Turkey.

“More than 100 production facilities as well as research and development located in the UK prove our commitment to the UK-market as a number one market in the EU,” said German automotive association president Bernhard Mattes.

“In the view of the German automotive industry, therefore, everything has to be done to maintain the free movement of goods, of services, the freedom of capital and the freedom of movement for workers between the UK and the EU,” Mattes said.