October 2020

There are just weeks left to save the UK and EU automotive sectors from is being called a “ € 110 billion ‘no deal’ Brexit disaster” by the SMMT and 23 other European industry organisations. In mid-September, with the end of the Brexit transition period just 15 weeks away, automotive industry organisations from across the UK and EU joined forces to call for an urgent agreement of a free trade deal between the UK and the EU. According to new calculations, a no deal outcome at the end of the year would cost the pan-European automotive sector some € 110 billion in lost trade over the next five years, putting jobs at risk in a sector that supports 14.6 million livelihoods, representing one in 15 of EU and UK jobs. Lead organisations representing parts vehicle and vehicle makers across the EU, including the European Automobile Manufacturers Association (ACEA) and the European Association of Automotive Suppliers (CLEPA), along with 21 national associations, including the SMMT German Association of the Automotive Industry (VDA), Comité des Constructeurs Français d'Automobiles (CCFA) and La Plateforme automobile (PFA), said that the sector could face this severe outcome without a deal. Without a deal in place by 31 December, both sides would be required to trade under World Trade Organisation (WTO) non- preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks. Automotive suppliers and their products will also be affected by tariffs. SMMT Chief Executive Mike Hawes said: "These figures paint a bleak picture of the devastation that would follow a 'no deal' Brexit. The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk. Our industries are deeply integrated so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity, and pull out every single stop to secure an ambitious free trade deal now, before it is too late." ACEA Director General Eric-Mark Huitema observed: "The stakes are high for the EU auto industry – we absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector – already reeling from the COVID crisis – will be hit hard by a double whammy." CLEPA Secretary General Sigrid de Vries added: "A 'no deal' Brexit would disrupt the integrated automotive supply chain and hit industry at a critical moment. The impact will be felt far beyond the bilateral trade streams alone, translating into a loss of jobs and investment capacity. The automotive sector is the EU's largest private R&D investor with € 60 billion invested each year. We need a deal that maintains the sector's global competitiveness." VDA President Hildegard Müller concluded: "The automotive industry needs stable and reliable framework conditions. It would be to the great disadvantage of both sides if the UK withdrawal were to end with the application of tariffs in mutual trade. This would jeopardise closely linked value chains and possibly make them unprofitable. Our member companies have more than 100 production sites in the United Kingdom. We hope that the EU and the UK will continue their close partnership - with a comprehensive free trade agreement." Getting such a deal is proving to be difficult. As Aftermarket went to press, the Internal Market Bill was voted through in the House of Commons by 340 votes to 263. If it passed into law, the UK government would gain the power to overrule the EU on parts of the Brexit agreement, which was already agreed with the bloc last year. Ministers maintain that the bill would provide essential measures to protect Northern Ireland and the rest of the UK if talks with the EU failed to help provide a deal. Critics of the Bill, including the Opposition, many Conservative MPs and other European countries maintain that the proposed mechanism would break the terms of the existing agreement, while also violating international law. Talks with the EU are set to continue into the autumn. www.aftermarketonline.net NEWS 4 AFTERMARKET OCTOBER 2020 www.aftermarketonline.net Urgent “ € 110 billion ‘no deal’ Brexit disaster” warning made Furlough: The 20% Solution From Friday 1 October, garages that have taken advantage of the Coronavirus Job Retention Scheme will need to pay 20% of wages so employees still receive 80% of their pay under furlough. As part of a progressive withdrawal of the furlough, the government’s salary contribution has dropped from 70% to 60%. The government is paying up to a total of £1,875 per worker, with employers topping up the national insurance, pension contributions and 20% of wages to make sure staff still get 80%. Since Saturday 1 August, businesses that have put staff on furlough have been required to pay National Insurance and pension contributions for their workers. At that point, the government was still paying 80% of wages. This was dropped to 70% on Tuesday 1 September. At present, the scheme is set to end on Saturday 31 October.