Auto-industry issues ‘stark warning’ against no-deal Brexit

Brussels: Europe’s biggest auto companies came to Brussels on Wednesday to issue a blunt warning against a no-deal Brexit, just as EU leaders were to meet to break an impasse in divorce talks.

“Ahead of this evening’s Brexit summit, Europe’s auto manufacturers and suppliers have come together to issue a stark warning on the potentially far-reaching impacts of a no-deal scenario on their sector,” European auto manufacturers’ association ACEA said.

This “would threaten their very business model,” the association added.

ACEA represents the world’s biggest auto groups including Volkswagen, Toyota, BMW, Renault and PSA, which all have operations in Europe.

The car-making business model is built on so-called “just in time” production practices where millions of car parts and components arrive to factories across EU borders just as they are needed.

No-deal between the UK and EU would see this highly-integrated production line face a series of blockages, including hold-ups at new customs checks.

“Our members are already making contingency plans and are looking for warehouse spaces to stockpile parts,” said ACEA secretary general Erik Jonnaert.

No deal could also see auto trade between the EU and UK hit with a 10 percent tariff, an extra cost that would be passed on to the consumer or absorbed by manufacturers, ACEA warned.

“Everything possible must be done to secure a future exchange of goods, services and people that is frictionless,” said Sigrid de Vries, secretary general of CLEPA, the European Association of Automotive Suppliers.

The business community is increasingly wary of Brexit negotiations that have snagged on thorny issues such as the Irish border that allowed for little compromise between London and Brussels

An EU leaders’ summit on Wednesday had been dubbed a “moment of truth”, ahead Brexit day on March 29, but seemed likely to end with no breakthrough.