Brexit concerns create double whammy concern for UK auto industry, says GlobalData

As the UK-EU negotiations for a post-Brexit transition period trade deal resume for their eighth round in London today;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view: 

“With the UK automotive sector facing a long recovery from the COVID-19 crisis that has decimated sales this year, it is now facing the additional possibility of no-deal on free trade between the UK and EU when the Brexit transition period ends at the end of the year.

“Time is very short to get a free trade deal in place or risk new tariffs and additional border checks on UK-EU trade in vehicles and parts. The auto industry in Britain would view it as a double whammy that seriously jeopardises recovery, competitiveness and future investment.

“The UK’s auto industry is highly integrated with that of the EU, in terms of both manufacturing supply chains and a high proportion of car exports being bound for the EU. Over half of the 1 million cars exported from Britain last year went to EU27 markets.

“If those EU-bound vehicles face a 10% import tariff levied by the EU under WTO trading rules, that potentially makes UK manufacturing much less attractive to car companies that have alternative options to produce at plants inside the EU’s tariff free customs union.

“Additional border checks would also be a concern for an industry heavily reliant on just-in-time logistics and with razor-slim margins.

“In the UK, a reciprocal 10% import tariff on EU-sourced vehicles would also create problems for manufacturers and retailers either in absorbing higher import prices or passing them on to consumers.”

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