European motor manufacturers warn Brexit could trigger 22% new vehicle price rise
The implementation of trade tariffs on the UK as a result
of Brexit could increase the price of light commercial vehicles by 10-22%, cars
by 10% and the cost of parts and components by an average 3-4%, according to the
European Automobile Manufacturer’s Association (ACEA).
In the build-up to last weekend’s European Union-Brexit
summit, European automobile manufacturers and suppliers sounded the alarm over
the potential damage that Brexit could do to the competitiveness of the
The sector represents 6.5% of the European Union’s GDP
and provides employment to some 12.2 million Europeans across the continent.
Automotive manufacturing is a highly complex industry. A
single vehicle part may be composed of more than 30 components, and undergo
over 100 process steps to become a finished product. It may pass through 15
countries, and cross borders multiple times in its material journey. A single
vehicle, in turn, consists of around 30,000 parts, said ACEA.
Vehicle manufacturers currently operate some 300 assembly
and production plants in Europe. They often manufacture engines or
transmissions in one country and assemble the final vehicle in another.
As a result, the European Single Market provides for a
high level of economic and regulatory integration. That level of integration was
reflected in how the automotive industry had strategically set up its business
operations in terms of supply chains, production sites and distribution
networks, said ACEA.
Today, the European Union is the UK’s biggest trade
partner. More than half of all cars and 90% of all commercial vehicles built in
the UK last year were bought by customers in Europe. The other way around, the
European Union represents more than 80% of the UK’s motor vehicle import
volume, worth €42 billion. Seven out of every 10 new cars sold in the UK come
from European Union plants.
Erik Jonnaert, ACEA secretary general, said: “Today, the
automotive industries of the European Union and the UK are closely integrated;
from the economic, regulatory and technical points of view. Any changes to this
level of integration will most certainly have an adverse impact on automobile
manufacturers with operations in the European Union or the UK, as well as on
the European economy in general.”
That impact, he said, would potentially be felt in a
number of areas, including tariffs, customs procedures, the regulatory
framework, and access to labour.
The Society of Motor Manufacturers and Traders (SMMT) recently
warned that a failure by the government to secure
a tariff-free trade deal as it negotiated the UK’s exit from the European Union
would add “some £1,500” to the cost of every new car sold in the country (Newsfeed: 31 March, 2017).
no deal at the end of the two-year Brexit negotiations would mean the adoption
of World Trade Organisation (WTO) rules, in what the SMMT called “the worst
foreseeable outcome” for the UK automotive industry.
Sigrid de Vries, secretary general, European Association
of Automotive Suppliers (CLEPA), said: “The European Union Single Market
represents a fundamental driver of global competitiveness.
“Vehicle manufacturers and component suppliers are
entangled in a highly integrated manufacturing network spanning Europe. Tariff-
and burden-free market access, as well as a stable and predictable regulatory
framework, are crucial instruments to sustain the supplier industry’s
technology leadership and secure investments and jobs.”