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How will Brexit affect the automotive industry?

The European transport sector is heavily regulated by the EU, with and the UK’s EU membership brings with it a wide range of EU laws covering rules on market access, safety, security, state aid, the environment, employment conditions, and more.

The possible impact of Brexit on transport – including the aviation, automotive, maritime, and rail sectors – depends much on what deal the British government negotiates post-Brexit, and to what extent it will seek to sign up to this existing regulatory framework.

In terms of the automotive transport sector, the central problem in the case of Brexit would be continued access to the single market and maintaining existing cross-border supply chains.

With regards to market access, currently the UK automotive manufacturing industry relies on EU markets to sell around half of its production, which rose to nearly 1.6 million cars in 2015. Much depends on what is negotiated in the case of the UK leaving the EU. It seems likely that the UK would attempt to continue access to the single market, but there is serious risk of tariffs being imposed and technical barriers to trade appearing.

On standards and safety, it seems likely that UK automotive manufacturers would continue to comply with EU rules on safety and type approval, with the UK already having safety and quality standards above EU levels in many areas. The key difference, however, in the case of Brexit would be the loss of the UK’s ability to influence the creation of new standards by the EU, an area in which the UK has often pushed for the bar to be raised.

Shortened piece from DeHavilland – leading political think tank

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