Brexit jigsawEurope’s OEMs and tier suppliers have issued a stark warning at the Brexit summit in Brussels this week about the potentially far-reaching impacts of the UK leaving Europe without a deal in place.

Drawing attention to the fact that more than 1,000 EU trucks cross the Channel to deliver to car and engine plants in the UK every day, the European Automobile Manufacturers’ Association (ACEA) warned that after a ‘no-deal’ Brexit, even short hold-ups at customs would cause massive logistical problems, 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 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 expensive.”

Jonnaert revealed that some of ACEA’s members were planning a temporary post-Brexit production shutdown but stressed that “no amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on World Trade Organization (WTO) terms.”

If the trading relationship does have to default to WTO rules, a 10% tariff would be applied to all cars traded between the EU and the UK. “Profit margins in our industry are significantly lower than 10%,” said Jonnaert, suggesting the extra costs would either have to be passed on to the consumer or absorbed by manufacturers.

“The clock is ticking, but it is not yet too late. That is why we are urging the negotiating teams on both sides to redouble their efforts to successfully conclude a withdrawal deal,” Jonnaert added.

Sigrid de Vries, secretary general of the European Association of Automotive Suppliers (CLEPA), suggested that smaller companies in particular, did 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.

“SMEs will be forced to deal with at least some of these issues if they want to continue to trade and serve their customers – facing additional financial and logistical risks,” he said.

In a recent survey, CLEPA members suggested policy-makers remove the uncertainty over Brexit as quickly as possible, starting with a withdrawal agreement to avoid a ‘cliff-edge’ exit scenario.

For more on the implications of Brexit, read the full report from Automotive Logistics UK