The Society of Motor Manufacturers and Traders (SMMT) has reiterated it call for vehicles, components and materials produced in the UK to receive equivalent treatment to those made within the European Union.
The SMMT has been urging amends to the rules for some time, joining calls from the National Franchised Dealer Association (NFDA), that the Made in Europe rules could raise car costs.
The SMMT warned that the proposed Industrial Accelerator Act (IAA) could prevent UK-built cars and vans from qualifying for incentives reserved for EU-made products.
The measures could cover support for greener corporate fleets and CO2 super credits, as well as vehicle procurement by EU member states.
The SMMT said exclusion would place UK manufacturers at a competitive disadvantage in their largest export market, potentially reducing demand for UK-built vehicles and affecting investment, production volumes and supply chains.
It could also increase costs and reduce vehicle choice for European businesses and consumers.
UK production supports 250,000 EU jobs
The SMMT is using new economic analysis to demonstrate the extent to which the UK and EU automotive industries remain interconnected.
Research conducted by Oxford Economics estimates that UK automotive production supports €24 billion (£20.6bn) of economic activity and 250,000 jobs across the EU.
The annual automotive trading relationship between the UK and EU is worth approximately €80bn (£68.6bn).
The EU is the largest export market for UK-built cars, while the UK is the EU’s largest export market for passenger vehicles.
EU automotive manufacturers also sell more components to the UK than to any other market outside the bloc.
Mike Hawes, SMMT chief executive, said: “The EU and UK automotive sectors have traded, invested and grown together over many years.
“Despite Brexit, supply chains remain deeply integrated and the cross-Channel trading relationship is worth €80 billion a year, supporting jobs, growth and investment.”
UK vehicle exports to the EU generate an estimated €5.6bn (£4.8bn) of spending on goods and services across the bloc.
Oxford Economics estimated that this activity supports 58,000 EU jobs and generates €1.6bn (£1.37bn) in tax revenue.
The SMMT warned that weakening demand for UK-built vehicles would have consequences beyond Britain because UK manufacturers are major purchasers of EU-made components, materials and services.
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Germany has greatest exposure
Germany has the greatest economic exposure to any reduction in UK automotive output.
UK vehicle production supports an estimated €6.3bn (£5.4bn) of economic activity and 69,000 jobs in Germany.
The equivalent contribution is €2bn (£1.72bn) and 24,000 jobs in France, €1.7bn (£1.46bn) and 20,000 jobs in Italy, and €1.5bn (£1.29bn) and 22,000 jobs in Spain.
The UK automotive industry also supports an estimated 23,000 jobs in Poland, 14,000 in Romania, 13,000 in Czechia and 11,000 in Slovakia.
The SMMT said the relative exposure was particularly high in Central and Eastern Europe because of the importance of labour-intensive automotive manufacturing to those economies.
Hawes backed the EU’s ambition to strengthen its industrial base, but argued that excluding the UK would undermine the scale and competitiveness of the wider European automotive sector.
He added: “Excluding the UK from ‘Made in Europe’ would be an own goal, weakening competitiveness, reducing scale and limiting consumer choice.
“We need a better outcome, one that recognises UK automotive as a trusted partner in the Industrial Accelerator Act and strengthens, rather than fragments, Europe’s automotive industry.”