ACEA calls on negotiators to think of the automotive market in Brexit talks

19 March 2018

Ahead of a European summit to approve the EU Council’s Brexit Guidelines, the automotive industry has called for negotiators to pay urgent attention to sector-specific issues which could cause disastrous implications for the market and its supply chain.

The European Automobile Manufacturers Association (ACEA) has highlighted a number of concerns that it wants those discussing the UK’s exit from the European Union to address. Otherwise, it fears that the European market, as well as that in the UK, will suffer the consequences.

A big concern for the industry is whether cars approved by UK authorities will still be able to be sold in the EU after Brexit, and vice versa. EU law requires that cars are tested by a national technical service to verify compliance with EU environmental, safety and security standards before they can be put on the market anywhere in the European Union, the so-called ′type approval’ system.

′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,’ stated ACEA secretary general, Erik Jonnaert. ′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 recommends that the EU and the UK mutually recognise each other’s vehicle approvals after Brexit – something which would only be possible if the UK remains fully aligned with all relevant EU legislation.

Another major question mark is whether the UK car market, the second biggest in the EU, will still count for reaching the 2021 CO2 targets. To monitor compliance with these targets, the CO2 performance of new cars is being tracked using registration data from all EU countries, including the UK. Once the UK leaves the EU however, it will no longer be subject to the CO2 targets. In theory, the requirement to include UK data in the fleet CO2 calculations will then also expire.

Jonnaert continued: ′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.’ ACEA’s priority is, therefore, to keep the system as it is today, with overall fleet compliance being based on CO2 data from the 27 EU member states, plus the UK.

Furthermore, given that the business operations of the auto industry are based on smooth ′just-in-time’ and ′just-in-sequence’ deliveries, any new customs checks as a result of Brexit would add cost, cause delays and threaten productivity. In the worst-case scenario, they could even lead to assembly line stoppages. ′The UK deciding to remain in a customs union with the EU would, of course, be an effective solution to enable frictionless trade in goods between the EU and UK,’ Jonnaert explained.

′But, regardless of which Brexit scenario is pursued, it is essential that EU and UK authorities already now start preparing to simplify customs procedures and to reinforce their customs capacity. Otherwise, we will see severe land and sea-port congestion on both sides of the Channel once the UK leaves the EU.’

Lastly, the potential application of tariffs (10% for passenger cars and 10% or 22% for commercial vehicles) in a so-called ′cliff-edge’ scenario would be extremely burdensome for automobile manufacturers and consumers alike.