A parking lot (illustration).

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ZhouZhiYong / SIPA ASIA / SIPA

Already very affected by the economic consequences of the health crisis, the automotive industry is increasingly worried about a possible failure of Brexit negotiations.

The manufacturers thus warned Monday that a "no deal" between the European Union and the United Kingdom would inflict on the sector a fall in trade of 110 billion euros over five years.

The coronavirus resulted in around 100 billion euros in lost production to the sector.

Hope until December 31

A total of 23 automotive industry organizations in Europe called on "the EU and the UK to secure an ambitious free trade agreement without delay" in a joint statement.

This call comes at the end of a week of intense friction between London and Brussels, fifteen weeks before the end of the Brexit transition period set for December 31.

Failure of the talks would be a threat to a sector which represents a total of 14.6 million British and European jobs, or one in 15 jobs in the region, warn the signatories, including in particular the Association of European Manufacturers of 'automobiles (ACEA) as well as the main national organizations, such as the CCFA in France, the VDA in Germany or the SMMT in the United Kingdom.

"The economies and jobs on both sides of the Channel are under threat of a second devastating blow in the form of a no deal," they warn.

The very costly WTO rules

In the absence of a trade agreement, the EU and the UK would be forced to trade under WTO rules which provide for 10% customs taxes on cars and up to 22% on vans and trucks.

"Such taxes, much higher than the small margins of most manufacturers, should certainly be passed on to consumers, making vehicles more expensive, reducing choice and affecting demand," say the signatory organizations.

The UK and the EU were producing at the rate of 18.5 million vehicles per year before the crisis.

This year, the industry estimates that 3.6 million units have already been lost due to the pandemic.

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