Key facts
- The European Automobile Manufacturers Association (Acea) is calling for the UK to be exempted from new EU "Made in Europe" rules.
- These rules require cars and parts to be manufactured within the EU to be eligible for subsidies or public procurement.
- Acea argues that the UK's integrated automotive value chain with the EU warrants equal status for UK-made components and vehicles.
- The rules are part of the EU's Industrial Accelerator Act (IAA), aimed at protecting the bloc's industry from subsidized Chinese exports.
- The Society of Motor Manufacturers and Traders (SMMT) warns that the regulations could effectively block UK-assembled vehicles from the majority of the European market.
New European Union rules designed to protect the bloc's automotive industry from subsidized Chinese exports risk excluding British manufacturers from their largest export market, according to the European Automobile Manufacturers Association (Acea).
Acea urged Brussels on Wednesday to grant the UK, Turkey, and Morocco "justified, targeted exemptions" to the "Made in Europe" regulations. These rules, drafted under the Industrial Accelerator Act (IAA), stipulate that vehicles and parts must be manufactured within the EU to qualify for subsidies or public procurement. The association highlighted the deeply integrated nature of the automotive value chain between the EU and the UK, even after Brexit, and called for UK-made components and vehicles to receive the same status as those produced within the EU27.
Mike Hawes, chief executive of the UK's Society of Motor Manufacturers and Traders (SMMT), echoed these concerns, stating that the rules would "effectively shut out UK-assembled vehicles from most of the European market." He described the potential outcome as "one of the most spectacular own goals in history," given the significant European ownership of UK car plants and the substantial trade in vehicles and parts between the UK and EU.
Several major European automakers, including BMW, Volkswagen, and Stellantis, have manufacturing operations in the UK. Nissan, an Acea member, has reportedly indicated that it might be forced to close its Sunderland factory if the rules are implemented without exemptions. Acea warned that excluding existing factories of its members would strand European investments and weaken the industry's competitiveness at a critical juncture.
The IAA is a key trade tool intended to counter the influx of Chinese components, which industry leaders believe threatens European industrial sovereignty. The EU and China have agreed to enter three months of diplomatic talks to attempt to avert a trade war, following warnings from European trade groups about the potential for domestic industries to be harmed by Chinese competition, a situation being described as "China shock 2.0." Volkswagen's proposal to cut up to 100,000 jobs in Europe underscores the significant trade imbalance, which is running at €1 billion daily in China's favor.
While Acea is heavily influenced by German members, the IAA is largely a French initiative, and any modifications would require the support of President Emmanuel Macron. Germany's Chancellor Friedrich Merz has advocated for measures to curb Chinese imports, blaming an "artificially low" yuan for China's trade surplus.