EU passenger car demand plummets, ACEA urges Brexit negotiators to avoid ‘no deal’

Niall Swan

17-Oct-2018

Cars in DuisburgLONDON (ICIS)–Registrations of new passenger cars in the EU tumbled in September as the new Worldwide Harmonised Light Vehicle Test Procedure came into effect at the beginning of the month, according to the latest data from the European Automobile Manufacturers’ Association (ACEA).

Registrations of new passenger cars fell by 23.5% in the EU in September, with most EU countries suffering double-digit losses, however, a 31.2% surge in August ahead of the legislation meant this decline was expected.

In the first nine months of the year, meanwhile, demand for passenger cars remained positive, climbing by 2.5% compared to the same period of 2017.

“Looking at the five biggest markets, demand went up in Spain (+11.7%), France (+6.5%) and Germany (+2.4%), while car sales contracted in Italy (-2.8%) and in the United Kingdom (-7.5%).”

ACEA on Wednesday also urged negotiators in the UK and the EU to avoid a “worst-case” no deal scenario.

The statement pointed to the fact that automobile production plants in the EU and the UK receive and fit millions of parts into vehicles every day and that any post-Brexit hold-ups at customers will cause massive logistical problems and generate significant costs.

“Our members are already making contingency plans and are looking for warehouse spaces to stockpile parts,” said ACEA secretary general Erik Jonnaert.

“However, the space required to stockpile for more than a short time would be absolutely huge – and expensive.”

“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.”

Jonnaert also pointed to the 10% tariff that would be applied to call cars traded between the EU and the UK under World Trade Organisation (WTO) rules.

“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.”

“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.”

UK Prime Minister Theresa May is set to meet other EU leaders on Wednesday in a crucial Brexit summit, which may determine the outcome of final negotiations.

Pictured: Parking lot in Duisburg, Germany
Source: Hans Blossey/imageBROKER/REX/Shutterstock

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