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EU automobile manufacturers react to EU-UK trade deal

EU-UK Trade Deal
Photo courtesy of ACEA

The European Automobile Manufacturers’ Association (ACEA) welcomed the deal between the European Union (EU) and the United Kingdom (UK) on their future trading relations announced on December 24. This agreement is a great relief for European automobile manufacturers, allowing the sector to avoid the catastrophic effect of a no-deal Brexit, ACEA said in a statement.

ACEA represents the 16 major Europe-based car, van, truck and bus manufacturers: BMW Group, CNH Industrial, DAF Trucks, Daimler, Ferrari, Fiat Chrysler Automobiles, Ford of Europe, Honda Motor Europe, Hyundai Motor Europe, Jaguar Land Rover, PSA Group, Renault Group, Toyota Motor Europe, Volkswagen Group, Volvo Cars, and Volvo Group.

“There is no other industry that is more closely integrated than the European automotive industry, with complex supply chains stretching right across the region,” ACEA Director General Eric-Mark Huitema said.

ACEA however noted that it cannot make a full assessment of the implications of the deal until all the technical details have been made public. Only at that stage will it be clear if the deal fully reflects the interests of EU auto manufacturers and their supply chains.

Known as “Brexit,” the UK voted to leave the EU in 2016 and officially left the trading bloc on January 31, 2020. However, both sides agreed to keep many things the same until December 31, 2020, to allow enough time to agree to the terms of a new trade deal. A trade deal facilitates EU-UK trade, which accounts for 49% of international UK trade. The United Kingdom leaves the European Single Market and European Union Customs Union from 1 January 2021.

“The impact of a no-deal Brexit on the EU auto industry would have been simply devastating, so we are first and foremost extremely relieved that an agreement was reached before the transition period expired,” Huitema said.

“Nonetheless, major challenges still lie ahead, as trade in goods will be heavily impacted by barriers to trade in the form of new customs procedures that will be introduced on 1 January 2021.”

With approximately 30,000 parts used in the construction of a single car – and many more in the construction of commercial vehicles – the automotive industry relies heavily on smooth and just-in-time delivery.

Compared to today’s situation, the deal struck by negotiators introduces much more red tape and regulatory burden for the automotive industry, ACEA said in a statement.

Every year, almost 3 million motor vehicles worth EUR54 billion (USD66.3 billion) are traded between the EU and the UK, and cross-Channel trade in automotive parts accounts for almost EUR14 billion (USD17.2 billion).