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Ecomotive

09/11/2020
Brexit without rules? A disaster to be avoided

Ecomotive

 

A unanimous automotive sector demands a solution to prevent trade blocks with the UK

Paolo Castiglia

Would a Brexit without rules be a drama? That could be the case for the automotive sector. We are just a few months away from the end of Brexit's transition period (the UK's exit from the European Union), and the automotive industry on the continent is calling for Britain and the European Union to secure a free trade agreement as soon as possible. Without this agreement, on December 31 both parties would in fact be forced to trade following the so-called "non-preferential rules" of the World Trade Organization, which provide, for example, for a 10% duty on cars and up to 22% on light commercial vehicles and trucks. As a result, the sector could suffer severe repercussions.

Both economies across the Channel, not to mention the job markets, could be facing a second devastating blow resulting from the absence of an agreement, which would have to be added to the approximately 100 billion euro of production value lost so far, this year, due to the crisis following the coronavirus pandemic, in a sector that, bear in mind, provides jobs for 14.6 million people and represents one out of 15 jobs in both the European Union and the United Kingdom. All the main trade associations representing car and component manufacturers in the European Union have kicked into action: Acea (European Automobile Manufacturers Association) and Clepa (European Automotive Components Association), along with 21 other national associations including the English Automotive Association (Smmt), the German Automotive Industry Association (Vda), the French Automobile Manufacturers Committee (Ccfa) and the French Automobile Plateforme (Pfa).

Associations warn: "Negotiators on both sides must now do everything possible to avoid an exit without agreement at the end of the transition, which, according to the latest calculations, would cost the pan-European automotive sector something like €110 billion in commercial losses over the next five years, putting a large number of jobs at risk”. Without an agreement, customs tariffs - much higher than the average margins of most manufacturers - "will almost certainly be passed on to consumers," manufacturers say, "making vehicles more expensive, which will reduce the choice available and affect the demand. In addition, automotive suppliers and their products will also be affected by this, as production costs will soar or they might be forced into purchasing components from more competitive countries”.

On the other hand, moving on to the national market, the summer months brought some peace of mind to the transport sector, particularly in the commercial vehicle market. After activities restarted in June, a month that managed to contain the decline to 6.1%, the estimates developed and illustrated by the Unrae Study and Statistics Center indicate that in the month of July, trucks up to 3.5t scored a positive sign with a +15.1% and 17,600 new registrations compared to 15,297 in the same month in 2019. In August, the increase was 2.2%, with 9,620 new registrations compared to the 9,411 recorded in the same period last year, when the market was already quite dynamic. After sales plummeted by 36% in the first half of the year, the decline in the first 8 months of the year remains heavy: -26.6% with a loss of more than 32,200 registrations, which translates into 88,911 units sold compared to 121,143 in January-August 2019. And then we have to talk about direct support for the sector's economy. With a project that aims to lend a hand to companies in difficulty, thanks to a disbursement of contributions on behalf of enterprises that – during the worst period of the pandemic with the subsequent lockdown – guaranteed the supply of staple goods making sure that business was carried out in absolute safety. This is the objective of "Autotrasporto Sicuro", announced by the National Register of road hauliers, which defines the criteria and the modalities of access and recognition of the above mentioned contribution in support of activities such as the sanitization of working places and vehicles as well as the purchase of safety devices and instruments to prevent the risks connected to the spread of the Covid-19 virus.

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