Europe's car manufacturers' sales slump, urge Brexit deal
By Abigail Townsend
Date: Wednesday 17 Oct 2018
(Sharecast News) - Europe's leading car producers have warned of surging costs if the UK quits the European Union without a deal, as figures published Wednesday revealed new car registrations had crashed.
According to the European Automobile Manufacturers Association (ACEA), new car registrations fell 23.5% in September against a 31.2% surge in the previous month. New car registrations for the nine months to 30 September were ahead 2.5%.
Sales in Germany were down 30.5% year-on-year in September, off 25.4% in Italy, 12.8% in France and 20.5% in the UK.
The ACEA attributed the slump to the new worldwide harmonised light vehicle test procedure, or WLTP. The beefed-up procedure was introduced on 1 September after it emerged that Volkswagon had fitted software enabling diesel cars to cheat emission tests.
But not all manufacturers have been able to get their cars tested to the new standards in time. Last month Germany's BMW warned on profits in part because of the costs associated with implementing the new standards, which it said had created "significant supply distortions in several European markets".
Claus Vistesen at Pantheon Macroeconomics said: "Sales of new cars were pushed forward in July and August, leading to a crash in September as the new rules came into effect.
"Overall the effect on the Eurozone economy from the voltality around these tests will be negative with respect to the third-quarter GDP data, thanks chiefly to a sharp slowdown in production and exports of new cars, as well as a fall in inventories."
The ACEA also called on the British and EU authorities, who are meeting at tonight's crucial Brexit summit, to secure a withdrawal agreement.
It said that 1,100 EU trucks cross the Channel every day to deliver parts to parts in the UK and that even short hold-ups at customs post Brexit would create "massive logistical problems, disrupting the production process and generating significant costs".
Said Erik Jonnaert, secretary general: "Some of our members are planning a temporary post-Brexit production shut down. But the harsh fact is that no amount of contingency planning can realistically cover all the gaps left by the UK's withdrawal from the EU on World Trade Organisation terms.
"We cannot forget that profit margins in our industry are significantly lower than 10% [the size of the tariff imposed on cars under WTO rules]. These extra costs will either be passed on to the consumer or will have to be absorbed by manufacturers.
"The clock is ticking but it not too late yet. That is why we are urging the negotiating teams on both sides to redouble their efforts to successfully conclude a withdrawal deal."
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