European auto industry warns of 'seismic' impact of no-deal Brexit

Europe's auto industry delivered a message on Monday about the cataclysmic effects of a no-deal Brexit, warning that it would have 'seismic' ramifications on car manufacture in Europe.

The heads of 23 auto business associations across Europe released a rare joint statement, coming together to warn against the UK crashing out of the European Union without a deal in place. Several auto giants have factories in the UK including BMW, Nissan and Peugeot PSA.

“Brexit is not just a British problem, we are all concerned in the European automotive industry, and even further,” said Christian Peugeot, head of French automotive industry association CCFA in the statement.

Auto manufacturers currently enjoy the freedom of the EU's single market, allowing supply chains to cross the English Channel quickly and without the hindrance of customs checks. According to industry data, the UK is the destination of around 10% of vehicles manufactured in mainland Europe.

UK Prime Minister Boris Johnson has vowed that his country will leave the EU on 31 October "come what may", with or without a deal with Brussels.

“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,” the joint statement said.

A hard no-deal Brexit would be a "severe" blow to the automotive industry's just-in-time supply chains that reach over borders and rely upon no administrative hassle, the associations said.

“The EU and UK automotive industries need frictionless trade and would be harmed significantly by additional duties and administrative burden on automotive parts and vehicles,” said Bernhard Mattes, the head of VDA, Germany’s auto lobby.

“Consequently, the UK and the EU should undertake all necessary steps to avoid a no-deal Brexit,” he said.

The UK's automotive sector is largely foreign-owned and is suffering its worst period of decline since 2001 at present, according to figures released by the Society of Motor Manufacturers and Traders (SMMT) last month.

The SMMT also released figures in July showing that carmakers have also severely reduced investment in the UK, which fell by 70% in the six months to June to £90-million (€98-million).

The industry body also said that the cost to automotive companies for one minute of stopped production time in the UK amounted to £50,000 (€54,700).

Britain has seen a string of announcements of factory closures this year, which many have attributed to the ongoing uncertainty over Brexit.

In February, Japanese car giant Nissan said that it had changed its decision to manufacture the new X-Trail in the UK, with production remaining in Japan: a country with a free-trade deal with the EU.

Also in February, Japanese auto company, Honda announced that its plant in Swindon would close in 2021.

In May, Jaguar Land Rover announced it would move production of its Defender from its Wolverhampton plant in the UK to its factory in Nitra, Slovakia.

Ford announced in June that it would close its Bridgend factory by September 2020.

Click here for the full text of the joint statement.

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