European car manufacturers and suppliers have issued a stark warning on the potentially far-reaching impacts of a no-deal Brexit.

The European Automobile Manufacturers’ Association (ACEA), says production plants in the UK and Europe fit millions of parts into vehicles every day all supplied on ‘just-in-time’ and ‘just-in-sequence’ delivery and production, without any delays or obstacles. Every day 1,100 EU trucks cross the Channel to deliver to car and engine plants in the United Kingdom alone. The fear is that if a no-deal Brexit becomes a reality, 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), which represents the 15 major Europe-based car, van, truck and bus manufacturers. “However, the space required to stockpile for more than a short time would be absolutely huge and very expensive.”

He added, “Some of our members are also planning a temporary post-Brexit production shutdown. But the harsh fact is that no amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms.”

Also under WTO rules, a 10% tariff would be applied to all cars traded between the EU and the UK. Erik comments, “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.”

Sigrid de Vries, Secretary General, European Association of Automotive Suppliers (CLEPA) adds, “Everything possible must be done to secure a future exchange of goods, services and people that is frictionless. Automotive components often cross borders several times before the final product reaches the customer, and that includes Channel crossings. Any change in the level of integration of the value chain will have an adverse effect on the competitiveness of individual companies and the sector as a whole.” He went on “Smaller companies in particular, that constitute important building blocks of the supply chain, do not have the internal systems, IT platforms or staff in place to deal with customs declarations, tariff classification, customs valuation, or calculations based on content origin.”