Key players in the UK and EU car industries have reacted positively to the news that a post-Brexit free-trade agreement has been reached. Both parties announced the long-awaited deal on Christmas Eve, just a week ahead of the December 31 deadline.

As was reported by Automotive News Europe (ANE), both the European Automobile Manufacturers’ Association (ACEA) and the UK’s Society of Motor Manufacturers and Traders (SMMT) have expressed delight at the new deal. Both organisations represent car makers in their regions, and fears were previously aired about the imposition of tariffs as a result of a ‘no-deal’ Brexit.

However, the new deal means goods including vehicles and vehicle components can be traded tariff- and quota-free after December 31. However, that courtesy is not extended to the services industry, which covers banking and insurance, and accounts for most of the UK economy.

Volkswagen plant, Wolfsburg

Nevertheless, car makers are said to be delighted with the deal, although the SMMT’s Mike Hawes said the detail of the deal would be crucial to its success.

“We welcome today’s agreement of a new EU-UK trading agreement, which provides a platform for our future relationship,” said Hawes. “We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation. A phase-in period is critical to help businesses on both sides adapt and efforts should now be sustained to ensure seamless implementation, with tariff-free trade fully accessible and effective for all from day one. We will continue to work closely with the government to ensure all companies are as prepared as possible in the limited time left."

Bentley resumes production in Crewe

Meanwhile ACEA’s director-general, Eric-Mark Huitema, said the organisation was “relieved” an agreement had been reached. But he also warned the new deal did not retain the status quo, with new customs rules that could impact the just-in-time nature of car manufacturing.

“There is no other industry that is more closely integrated than the European automotive industry, with complex supply chains stretching right across the region,” said Huitema. “The impact of a no-deal Brexit on the EU auto industry would have been simply devastating, so we are first and foremost extremely relieved that an agreement was reached before the transition period expired.

“Nonetheless, major challenges still lie ahead, as trade in goods will be heavily impacted by barriers to trade in the form of new customs procedures that will be introduced on 1 January 2021.”