‘Most spectacular own goal in history’: new EU rules threaten to shut out UK car manufacturers | Automotive industry
The EU’s car industry has called for Britain to be fully included in new “Made in Europe” rules that threaten to lock British manufacturers out of their biggest export markets.
The Association of European Automobile Manufacturers (Acea) on Wednesday called on Brussels to grant Britain, Turkey and Morocco “justified, targeted exemptions” to rules requiring cars and parts to be produced within the EU to qualify for subsidies or public tenders.
The European Commission has drawn up rules under the Industrial Accelerator Act (IAA) to try to protect the EU’s industry from China, whose cheap but heavily subsidized exports are negatively impacting European products. But since the rules only apply to EU members, they threaten to be the most damaging outcome of Brexit yet for British manufacturers.
Acea, seen as highly influential among European governments, said: “The European automotive industry operates a deeply integrated value chain with the UK, even after Brexit. Vehicles, components and batteries produced in the UK should therefore have the same status as those produced in the EU27, with equal access to every policy instrument.”
The powerful lobby group’s support will help Britain avoid being damaged in negotiations with the EU. UK European affairs minister Nick Thomas-Symonds met with EU trade commissioner Maroš Šefčovič On Wednesday, with the IAA part of the agenda to discuss progress in UK-EU relations.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), a UK lobby group, said he was pleased that the European industry’s position reflected the “integrated nature of our respective automotive sectors” and was in line with the hopes of European suppliers. “We trust that European regulators will reflect this mutual interest in their final drafts,” he said.
Hawes told a conference in London on Tuesday that the rules would “effectively exclude vehicles assembled in the UK from most of the European market”. He argued that it would be “one of the most spectacular own goals in history” because many of Britain’s factories were owned by Europeans, while Britain and the EU were each other’s biggest markets for cars and spare parts.
Acea members BMW, Volkswagen and Stellantis own Mini, Bentley and Vauxhall factories in the UK respectively; JLR, Ford and Toyota are also part of the group and have large manufacturing operations in the UK. Another member, Nissan, was reported to have privately discussed that it would have to close its Sunderland factory if the rules remained. More than half of Britain’s car exports go to the EU.
Acea said: “Excluding Acea members’ existing factories, for example, would leave European investments in the lurch and weaken our competitiveness at the worst possible moment.”
The IAA is seen as one of the key trade tools the EU wants to use to stem the flow of Chinese components that industry leaders say threatens the sovereignty of European industry. On Tuesday, the EU and China decided to start three-month diplomatic talks to prevent a trade war.
Last month, several European trade groups warned of the potential for cannibalization of the domestic industry, widely described as “China shock 2.0,” made clear by Volkswagen’s proposal to cut as many as 100,000 jobs in Europe. The trade imbalance is currently reaching €1bn (£860m) a day and is predicted to approach €400bn in China’s favor by the end of the year.
While Acea is heavily influenced by its German members, the IAA is French-driven legislation and any changes would require the support of the country’s president, Emmanuel Macron.
Germany, whose auto industry has significant production in China, was recently called on by the Center for European Reform think tank to “wake up” to the China threat, and the excitement from industry voices appears to be having an effect.
After the summit of EU leaders in June, German Chancellor Friedrich Merz proposed a “plaza agreement” to rein in the Chinese. But at the G7 summit in France last month, he blamed the “artificially low” yuan as the main reason for China’s oversupply.
