BRUSSELS — Europe and the UK’s car industries called on Monday on the two sides to urgently clinch a free trade agreement, warning that a disorderly Brexit would cost the sector 110 billion euros ($130 billion) in lost trade over the next five years.
Less than four months before a post-Brexit transition period ends in December, Britain and the European Union’s talks on a trade deal for 2021 onwards have been plunged into crisis, after Britain tabled a plan to break the divorce treaty both sides signed in January.
Failure to secure a deal would lead to tariffs. That would make vehicles more expensive and cause a drop in demand that could eliminate production of 3 million vehicles over the next five years, 23 auto industry associations said in a joint statement on Monday.
That could cost EU plants 57.7 billion euros and UK factories 52.8 billion euros, they said.
“These figures paint a bleak picture of the devastation that would follow a ‘no deal’ Brexit,” Mike Hawes, CEO of Britain’s Society of Motor Manufacturers and Traders (SMMT), said in a statement.
Associations that signed the statement included SMMT, the European automakers association ACEA, the European suppliers association CLEPA, and Germany’s VDA industry body.
A hard Brexit would see World Trade Organization tariffs applied to trade across the English Channel, adding to pressure on Europe’s car industry which is already reeling from the economic fallout of the coronavirus pandemic.
The tariffs, of 10 percent for cars and up to 22 percent for trucks and vans, would “almost certainly” need to be passed onto consumers, the associations said.
These losses would come on top of an estimated 100 billion euros in lost UK and EU production value so far this year, as car sales plunged during the pandemic.
New-car registrations in the EU dropped by 38 percent in the first half of 2020, compared with the same period last year, while sales in Britain saw a 49 percent drop.