Ahead of the Brexit summit, Europe’s auto manufacturers and suppliers have come together to issue a warning on the potentially far-reaching impacts of a no-deal scenario on their sector.
Automobile production plants receive and fit millions of parts into vehicles every day. All manufacturers rely on ‘just-in-time’ and ‘just-in-sequence’ delivery and production, without any delays or obstacles. These parts are in constant transit in trucks, arriving as and when they are needed.
Every day 1,100 EU trucks cross the Channel to deliver to car and engine plants in the United Kingdom, for example. After Brexit, even short hold-ups at customs will cause massive logistical problems, disrupting the production process and generating significant costs.
‘Our members are already making contingency plans and are looking for warehouse spaces to stockpile parts,’ stated Erik Jonnaert, secretary general of the European Automobile Manufacturers’ Association (ACEA). ‘However, the space required to stockpile for more than a short time would be absolutely huge – and expensive.’
Under WTO rules, a 10% tariff would be applied to all cars traded between the EU and the UK. Erik commented, ‘We cannot forget that profit margins in our industry are significantly lower than 10%. At the end of the day, these extra costs will either be passed on to the consumer or will have to be absorbed by the manufacturers.’
‘The clock is ticking, but it is not yet too late. That is why we are urging the negotiating teams on both sides to redouble their efforts to successfully conclude a withdrawal deal,’ Erik underlined.