The UK automotive trade body SMMT said on Thursday that carmakers require an early political determination over whether Britain will be regarded as 'Made in EU' under the European Commission's Industrial Accelerator Act (IAA), warning that the lack of clarity could put investments on hold. The call comes amid rising pressure from cheaper Chinese electric vehicles in both the UK and EU markets.
Michael Hawes, chief executive of the SMMT, said the IAA was intended to strengthen the competitiveness of European industry against lower-cost producers overseas and stressed that the UK is not a low-cost country. "The objective was to bolster the competitiveness of European industry vis-a-vis the increasing challenge coming from further afield, low-cost countries. We are not a low-cost country. The intention of this regulation was not to hit the EU-UK trade," he told reporters.
The IAA proposes low-carbon and 'Made in EU' conditions for public procurement and for subsidies relating to sectors such as aluminium, cement, steel, renewable energy and green technology. Under the draft rules, countries that have trade agreements with the EU would be treated as if they were 'Made in EU', with any exceptions to be published when the IAA is adopted - a process that could take at least a year.
Despite that timetable, Hawes said the automotive industry needs an earlier political signal about Britain’s status, ideally before an EU-UK summit scheduled to take place in June or July. He warned that without an early statement the IAA could cast a shadow over UK automotive investment for several years.
An annex to the IAA that is specific to automakers would require vehicles to be assembled within the EU, a provision that could effectively exclude British-built cars from qualifying. The SMMT highlighted the economic interdependence of the two markets, saying the annual value of automotive trade between the EU and Britain is about 80 billion euros - roughly $94.34 billion - and that the two remain each other’s largest passenger car markets.
The trade body also noted that Britain is the EU’s largest purchaser of auto components, citing United Nations data. Hawes underlined the practical consequence for investment planning: without certainty on how UK production will be treated, it is harder for companies to place UK projects on boardroom agendas because future costs cannot be reliably modelled.
"So for a couple of years unless there is a clear indication from the outset ... it casts a cloud over the UK automotive industry. It’s harder to put UK investment on a boardroom agenda if you can’t cost the future. We’re trying to get a clear political statement now," he said.
The IAA’s eventual text and any published exclusions will determine whether the UK benefits from the same treatment as trade partners with formal agreements, but industry leaders are pressing for faster political clarity to avoid delaying capital allocation decisions in a sector facing intensifying global competition.