The Society of Motor Manufacturers and Traders (SMMT) called on the EU to amend its proposed Industrial Accelerator Act (IAA) to ensure the UK automotive sector remains a recognised ‘Made in Europe’ partner.
The UK trade body made the appeal during meetings with EU representatives in Brussels, warning that excluding UK-built vehicles, parts and batteries from the policy would damage both economies and weaken European automotive competitiveness.
The SMMT said granting equivalent treatment to UK-built products across all automotive provisions of the IAA would preserve “a long-established trading relationship, supporting economic growth, industrial transformation and decarbonisation”.
It said the EU-UK automotive partnership is worth €80 billion (£70bn) annually, with the balance of trade favouring the EU.
The UK is the EU’s largest export market for passenger cars, with trade worth €39.7bn (£35bn) a year to EU manufacturers. The EU also exports €9.1bn (£8bn) of automotive components to the UK each year, more than to any other global market.
Ensure you always receive AM insights. Make us a preferred source of news on Google
Risk of undermining trade
The SMMT warned that the IAA’s ‘Made in Europe’ policy, as currently drafted, risks undermining this trade by excluding UK automotive products from incentives available to EU-based manufacturers.
These include measures linked to the decarbonisation of corporate fleets, which account for around 60% of the EU new car market, and CO2 super credits.
The organisation said removing UK access to these incentives would place the sector at a competitive disadvantage, potentially impacting production volumes, reducing supply chain demand and limiting consumer choice while increasing prices.
It also warned that EV trade could be disrupted at a critical stage in the transition to zero emission mobility.
EU-built BEVs account for 61.6% of UK EV sales and nine in 10 models eligible for the UK’s Electric Car Grant.
Current IAA rules jeopardise competitiveness
Mike Hawes, chief executive of SMMT, said: “Brexit put the resilience of our shared industry under enormous stress, but manufacturers have overcome those challenges to grow our trade in electrified vehicles alone to record levels.
“If the IAA proceeds as drafted, it threatens to reverse progress, undermining the trade and cooperation agreement (TCA) all sides worked so hard to deliver and jeopardise our respective competitiveness, damaging to jobs, investment and innovation.
“The EU and UK automotive sectors are highly integrated and a closer relationship is now compelled by the increasing uncertainties in the global environment.
“Instead of weakening our partnership, we must seize the opportunity to deepen collaboration and unlock the full promise of the TCA, ensuring the successful transformation of a globally competitive automotive industry.”
SMMT is urging the EU to include the UK within its ‘Made in Europe’ framework, ensuring UK-built vehicles and components are treated as equivalent to EU content.
It also called for similar consideration to be extended to other aligned trade partners.
The organisation said the upcoming EU-UK summit this summer presents a key opportunity to strengthen industrial cooperation, improve supply chain resilience and protect the competitiveness of European automotive manufacturing.