British and European carmakers warn that Brexit without a deal could leave £ 100bn in the region’s car industry over the next five years, adding to the huge losses already caused by Covid-1
A letter signed by 23 trade groups across Europe called on the government to make a deal, not on World Trade Organization (WTO) rules.
It says that without such there will be a “catastrophic” increase in tariffs.
A government spokesman said he was “working hard” to reach an agreement.
The industry has already reached £ 90 billion this year because of Covid-19, added SMMT.
Britain left the European Union on January 31, but will enjoy duty-free trade with the bloc until the end of the year as part of the transition period.
But there are growing fears that until then, the two countries will not be able to conclude a longer-term trade deal.
The European Automobile Manufacturers Association (ACEA), which wrote the letter, said securing a trade agreement by January was an absolute must for companies on both sides of the English Channel.
“Otherwise, our sector – which is already being shaken by the Kovid crisis – will be hit hard by a double emphasis,” said CEO Eric-Mark Whitema.
Mike House, head of the United Kingdom of Car Manufacturers and Dealers in the UK (SMMT), said the trade deal was crucial because the industries in the UK and the EU are so integrated.
“These figures paint a grim picture of the devastation that will follow Brexit” without a deal, “he said.
“The shock of tariffs and other trade barriers would exacerbate the damage already caused by a global pandemic and recession, putting businesses and livelihoods at risk.”
Industrial associations on the continent, including Germany, France, Ireland, the Netherlands, Belgium, Sweden, Denmark, Italy, Portugal and Eastern Europe, also say they fear job losses in their own countries.
Under WTO terms, car exports will face a 10% tariff, rising to 22% for vans and trucks.
This would hit the car manufacturers’ margins and the tariff increase would be passed on to consumers, which would affect demand. Car suppliers and their products will also be affected.
SMMT said this could lead to £ 49bn of lost business for carmakers in the UK and £ 52bn for those in the EU by 2025.
It calls for a free trade deal that also applies to alternative fuel vehicles and automotive components and “includes zero tariffs or quotas”.
A government spokesman said: “We want to reach a free trade agreement with the EU that is based on precedent and recognizes the foundations of our position as an independent, sovereign state.
“We remain committed to working hard to reach an agreement by mid-October and expect to continue discussions this week.
“At the same time, we are actively engaging with the automotive industry on how they can prepare for changes in trade at the end of the transition period when we leave the single market and the customs union.”