Europe and Britain’s automotive industries will discuss the urgent call on concluding a free trade agreement, given the warning that an updated agreement in trade after Brexit would cost 110 billion euros ($130 billion) for the sector in over the next five years from lost trade. The post-Brexit transition period will end in December, and the talks of trade deal between Britain and EU for 2021 onwards have been tumbling into crisis after Britain released a plan to break the treaty signed in last January.
If the deal failed to secure, the imposed tariff would make vehicles more expensive and cause a drop in demand, projectively eliminating production of 3 million vehicles over the next half-decade, as a joint statement by 23 automotive industry associations said. The drop will cause UK factories 52.8 billion euros and cost EU plants 57.7 billion euros. Mike Hawes, Britain's Society of Motor Manufacturers and Traders (SMMT) chief executive said the figures show the expected damage that would follow a ‘no deal’ Brexit. Other associations signed the statement included the European Association of Automotive Suppliers, Germany's Association of the Automotive Industry and the European Automobile Manufacturers' Association.
Hard Brexit means the World Trade Organization's tariff would be applied to trade between Britain and EU countries, adding more pressure on Europe's automotive industry which is already impacted by the pandemic-induced economic fallout. The implied tariffs, up to 22% for vans and trucks and 10% for cars, would “almost certainly” passed onto customers, said the associations. These losses are estimated to be on top of expected 100 billion euros production values loss so far this year from the car sales plunge. EU’s new passenger car registration dropped by 38% in H1 2020, in year-on-year comparison, while Britain’s sales booked a 49% decline.
