Carmakers face $130b hit under hard Brexit

BRUSSELS－Carmakers in Europe have called on the European Union and Britain to urgently clinch a free-trade agreement, warning that a disorderly Brexit would cost the sector 110 billion euros ($130 billion) in lost trade over the next five years.

Less than four months before a post-Brexit transition period ends in December, talks between the United Kingdom and the EU for a deal from next year have plunged into crisis after Britain tabled a plan to break the divorce treaty both sides signed in January.

Failure to secure a deal would lead to tariffs. That would make vehicles more expensive and cause a drop in demand that could eliminate production of 3 million vehicles over the next five years, 23 motor vehicle industry associations said in a joint statement on Monday.

That could cost EU factories 57.7 billion euros and British factories 52.8 billion euros, they said.

"These figures paint a bleak picture of the devastation that would follow a 'no deal' Brexit," said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, or SMMT, in the UK.

Associations that signed the statement included SMMT, the European Automobile Manufacturers' Association, the European Association of Automotive Suppliers and the Association of the Automotive Industry of Germany.

A hard Brexit would result in World Trade Organization tariffs being applied to trade across the Channel, adding to pressure on Europe's car industry, which is already reeling from the economic fallout of the coronavirus pandemic.

The tariffs, of 10 percent for cars and up to 22 percent for trucks and vans, would "almost certainly "need to be passed onto consumers, the associations said.

These losses would come on top of an estimated 100 billion euros in lost UK and EU production value so far this year as car sales plunged during the pandemic.

New passenger car registrations in the EU fell 38 percent in the first half of this year, compared with the first half of last year, while sales in Britain fell 49 percent.

Agencies Via Xinhua