Auto industry wants its Brexit concerns addressed

While it's great that the UK and EU have reached an agreement on the broad outlines of Brexit, the concerns of the automotive industry still need to be addressed. Ignoring them could have “disastrous” consequences – on both sides of the Channel, says ACEA.

The auto industry has a specific set of worries and concerns relating to Britain's exit from the EU, scheduled for the end of March 2019. More than many others, the automotive sector is a transnational industry, both on the manufacturing side, with supply chains transcending national borders, and on the commercial side, with vehicles made in one country sold in many others as well. 

That's why ACEA, the European Automobile Manufacturers Association has highlighted a number of concerns it wants addressed - this ahead of a European summit to approve the EU Council’s Brexit Guidelines. Three major concerns are:

→ Will cars approved by UK authorities still be able to be sold in the EU after Brexit, and vice versa? 

EU law requires that cars should be tested by a national technical authority, in order to verify that they comply with the environmental, safety and security standards set by the EU. This 'type approval' system is required before any car model can be marketed anywhere in the EU. 

Says ACEA secretary general, Erik Jonnaert: “It is essential that manufacturers can maintain valid type approvals in both the EU and the UK as of 30 March 2019, no matter where the approval was issued. We are therefore calling on the European Commission to clarify how existing approvals can be transferred from an EU27 authority to the UK, and the other way around”.

ACEA also asks that EU and UK mutually recognise each other's post-Brexit vehicle approval systems. This would require the UK's continued full alignment with relevant EU legislation, and precisely that principle is heavily contested in the British political arena. 

→ Will the UK car market still count towards reaching the EU's 2021 CO2 targets? 

The CO2 performance of new vehicles is tracked using registration data from all EU countries, including the UK. This data is used to monitor compliance with the 2021 CO2 targets. However, once the UK leaves the EU, it will no longer be subject to these targets, nor will the UK data need to be included in the CO2 calculations. How will this be dealt with? As the UK currently is the EU's second-biggest car market, the question is hardly trivial. 

“Excluding UK data from the CO2 calculations would leave very limited time for the industry to readjust compliance strategies for reaching the stringent 2021 targets”, says Jonnaert. ACEA, therefore, favours keeping the system as-is, with overall fleet compliance based on CO2 data not just from all 27 remaining EU member states but also the UK.

→ How will upcoming customs issues be dealt with? 

Automotive manufacturing is based on just-in-time and just-in-sequence delivery of materials, in many cases from one country to another. If Brexit results in new customs checks, that could add not just cost to this process, but also cause delays, and threaten productivity – perhaps even assembly-line stoppages. 

To avoid this, ACEA prefers that the UK remain in some sort of customs union arrangement with the rest of the EU. “That would be an effective solution to enable frictionless trade in goods between the EU and the UK”, says Jonnaert. 

Whichever Brexit scenario wins out, EU and UK should start preparing now to simplify customs procedures and amplify customs capacity, ACEA urges. “Otherwise, we will see severe land and sea-port congestion on both sides of the Channel once the UK leaves the EU”.

ACEA also urged negotiators to avoid the so-called 'cliff-edge scenario', in which the UK leaves without any deal, which would leave the door open for tariffs of 10% on passenger cars and 22% on commercial vehicles – a move which would be “extremely burdensome” to manufacturers and consumers alike.