The effect of a no-deal Brexit on the European Automotive Industry

The effect of a no-deal Brexit on the European Automotive Industry

Posted By

With the prospect of a no-deal Brexit still firmly on the cards, automotive associations across Europe have formed a unanimous opposition to the potential outcome of Britain withdrawing from the European Union without trade agreements in place. 


If terms are not agreed between the UK and EU regarding how they trade between each other, many industries in the UK could experience dire difficulties which will inevitably affect trade across the rest of Europe. 


What will a no-deal brexit involve?


When the British public voted to leave the European Union, parliament had to negotiate a variety of agreements before the withdrawal could take place. This has been to no avail thus far; meaning the prospect of a no-deal brexit has become increasingly likely, despite significant political opposition.


No-deal would mean no special agreements between EU leaders and UK politicians. The effects of this could include:

  • Reintroduction of border checks
  • Inhibition of trade and transport
  • Invalidation of UK driving licences in EU countries
  • Additional charges for the use of UK mobiles in EU countries
  • No transition period (instant effects)


How does this affect the Automotive Industry?


The general fear amongst the industry is that a lack of trade & transport agreements will cause severe disruption, and ultimately drive the cost of manufacturing cars as well as their sale price. 


The automotive industry produces almost 20 million vehicles per year within the EU; with the sector as a whole employing nearly 14 million people. The UK’s departure would inevitably result in billions worth of tariffs, which would impact consumer choice and affordability across the UK and for EU members. 


Just one minute of production stoppage in the UK amounts to a cost of approximately £50,000. With trade barriers being introduced, the industry could suffer from potentially billions in costs. 


Manufacturers in the automotive industry believe this sort of disruption and potential financial impact should be avoided at all costs and a well-negotiated Brexit is the only withdrawal that should be delivered. 


Threat to UK Jobs


There have already been instances where the prospect of a no-deal Brexit has affected UK industry.


Nissan has reversed their decision to build the next X-Trail model in its Sunderland factory, and Honda’s single UK vehicle factory in Swindon will be closing down, with around 3500 jobs set to be lost in 2 years time.


Who is in opposition? 


The organisations representing the opposition to a no-deal Brexit includes various automotive manufacturers in the EU: European Automobile Manufacturers Association (ACEA), Society of Motor Manufacturers and Traders (SMMT), European Association of Automotive Suppliers (CLEPA), and 21 other national associations. 


Below are some quotes from significant association leaders:


“Brexit is not just a British problem, we are all concerned in the European automotive industry, and even further. Be it as exporters to the UK market or producers locally, which we are both, we will inevitably be negatively affected.”

Christian Peugeot, President of the Committee of French Automobile Manufacturers (CCFA) 


“Barrier-free trade is crucial for the continued success of the deeply integrated European auto industry, which operates some 230 assembly and production plants right across the EU. Brexit will have a significant negative impact on the automotive sector and a ‘no deal’ Brexit would greatly exacerbate those consequences, causing massive disruptions to an industry which is so vital to Europe’s economy. Even the repeated need to plan and implement contingency measures to deal with a disorderly Brexit is highly disruptive to our members. The European automobile industry therefore calls for all sides to rule out a ‘no deal’ scenario as soon as possible.”

Erik Jonnaert, Secretary General of ACEA


“A ‘no deal’ Brexit would have an immediate and devastating impact on the industry, undermining competitiveness and causing irreversible and severe damage. UK and EU negotiators have a responsibility to work together to agree a deal or risk destroying this vital pillar of our economies.”

Mike Hawes, Chief Executive of SMMT 


Read more about how automotive leaders have united against no-deal Brexit

At Peak Cashflow, we are experts in providing funding solutions for when difficulties arise. If you need help preparing for a no-deal Brexit, or any advice on protecting your finances, please contact us today.