Auto industry warns of 'seismic' no-deal Brexit shock

Chairman of the managing board of French carmaker PSA Peugeot Citroen. Photograph:( AFP )

AFP Brussels, Belgium Sep 23, 2019, 06.11 PM (IST)

The European auto industry on Monday warned of catastrophic effects of a no-deal Brexit saying it would have a "seismic" impact on car-making.  

In a rare joint statement, chiefs from 23 auto business associations across Europe joined forces to caution against a brutal exit from the bloc by Britain, where giants BMW, Peugeot PSA, and Japan's Nissan have factories.

"Brexit is not just a British problem, we are all concerned in the European automotive industry, and even further," said Christian Peugeot, head of French automotive industry association CCFA in the statement.

Thanks to the EU's single market, automakers have supply chains that criss-cross the Channel and Britain is the destination of around 10 percent of vehicles assembled on the continent, according to industry data.

British Prime Minister Boris Johnson has rattled nerves with his vow to leave the European Union on October 31 come what may -- with or without a trade deal with Brussels.

"The UK's departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel," the joint statement said.

A chaotic Brexit would land a "severe" blow against the industry's just-in-time supply chains that stretch across international borders and depend on zero administrative hassle, the associations warned.

"The EU and UK automotive industries need frictionless trade and would be harmed significantly by additional duties and administrative burden on automotive parts and vehicles," said Bernhard  Mattes, the head of German auto lobby VDA. 

"Consequently, the UK and the EU should undertake all necessary steps to avoid a no-deal Brexit," he said.

Britain's largely foreign-owned car sector is already reeling from Brexit shocks, with French manufacturer PSA warning in July that it could shut down a key plant in northwest England if it becomes unprofitable.

Carmakers are also slamming the brakes on investment in Britain, which fell 70 percent to £90 million ($109 million, 98 million euros) in the six months to June, the UK's Society of Motor Manufacturers and Traders said in July.

The SMMT has also warned that the cost to auto companies of one minute of stopped production time in Britain would amount to 54,700 euros (£50,000).

A spokesman for the UK government's Department for Business told AFP the government was still working hard towards a deal and was aiding businesses. 

"We have turbocharged preparations for Brexit across all sectors, including automotive, with £108 million of funding to promote and support businesses," the government spokesman said.

This would, he said, "ensure they are ready for Brexit and can take advantage of the opportunities of our future outside of the EU."

Story highlights

In a rare joint statement, chiefs from 23 auto business associations across Europe joined forces to caution against a brutal exit from the bloc by Britain, where giants BMW, Peugeot PSA, and Japan's Nissan have factories.