Following the shock vote of Britain’s decision to leave the European Union, automakers began planning for the worst. Now, various bodies from the EU have spoken out and warn of dangerous damage potential should operations within the auto industry be hindered.
The European Automobile Manufacturer’s Association and the European Association of Automotive Suppliers spoke out for the first time, according to AutoCar, and reiterated the close-knit relationship Britain and the rest of the EU hold regarding the auto industry.
“Any changes to this level of integration will most certainly have an adverse impact on automobile manufacturers with operations in the EU or the UK, as well as on the European economy in general,” Secretary General, Erik Jonnaert, stated.
The impacts of “Brexit,” the colloquial term for Britain’s decision to exit the trade bloc, are most likely to be felt in new tariffs, customs procedures, the regulatory framework and access to labor. The EU allows for the free flow of labor and goods.
“Tariff- and burden-free market access, as well as a stable and predictable regulatory framework, are crucial instruments to sustain the supplier industry’s technology leadership and secure investments and jobs,” Sigrid de Vries, Secretary General, remarked.
Furthermore, the price of vehicles is likely to go up, and the organizations added the additional cost would likely have to be endured by the automakers if they choose to export from the UK.
There is one flip side to Brexit. Companies may have no choice but to invest in the UK and build more local plants to get around any new tariffs, something PSA Groupe has alluded to following its purchase of Opel and Vauxhall.
“There are so many factors involved in supply selection, including cost, quality and innovation. But if this [tariffs imposed by Brexit] encouraged people to invest in the UK that would be a positive,” PSA chief, Carlos Tavares, has said.
Vauxhall increased vehicle prices on its vehicles by 2.5 percent following the decision and Opel called the vote a “bad omen” when still under full GM leadership.
Of course, GM will have nothing to worry about after the sale of Opel and Vauxhall to PSA Groupe is final, which is expected to close by the end of this year at the earliest.