SMMT: Calls for EU to Keep UK Car Manufacturing 'Made in EU'
The UK’s largest trade association, the Society of Motor Trade Manufacturers and Traders (SMMT), has called on the EU to amend its proposed Industrial Accelerator Act (IAA) to keep the UK automotive sector as a Made in Europe partner.
The call comes as the SMMT meets with EU representatives in Brussels in order to highlight the importance of the UK automotive industry to the wider European industry.
It has asked for clarity from the EU as to whether the UK would be subject to the regulation, with the trade association arguing that excluding the UK from the Made in Europe policy would inflict significant harm to UK and EU manufacturing capability.
What is the IAA?
The IAA, proposed by the European Commission, is a framework designed to accelerate industrial investment and decarbonisation in strategic sectors, including the automotive industry. It also includes steel, cement and aluminium.
It rests on three main pillars: faster permitting for industrial projects, creating lead markets for clean industrial projects and strengthening investment in strategic sectors.
Part of the framework includes a Made in Europe initiative in public procurement that could see the UK excluded from incentives offered to EU based manufacturers.
Made in Europe
The SMMT argues that the Made in Europe regulation, as is currently drafted, would exclude the UK from incentives offered to EU manufacturers, notably incentives connected to the electrification of corporate fleets.
These account for around 60% of the EU new car market, according to data from the European Commission.
Mike Hawes, SMMT Chief Executive, says: “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 Industrial Accelerator Act proceeds as drafted, it threatens to reverse progress, undermining the Trade and Cooperation Agreement all sides worked so hard to deliver and jeopardise our respective competitiveness, damaging to jobs, investment and innovation.”
The EU-UK automotive partnership is valued at €80bn (US$94.4bn) annually. The UK remains the EU’s largest export market for passenger cars, and vice versa, which is worth an annual €39.7 billion to EU based manufacturers, according to the SMMT.
The EU also sells €9.1bn (US$11.1bn) worth of typical automotive components to the UK automotive every year, which is worth more than to any other global market, according UN data from 2024.
How it impacts EVs
The incentives the UK could be excluded from provide financial support for companies adopting low-carbon and zero emission vehicle fleets and support manufacturers’ ability to sell in EU markets.
The SMMT argues that preventing UK access to these incentives would put the sector at a disadvantage impacting production volumes and constraining EU supply chains.
The value of EU EV imports to the UK has increased tenfold since 2019, with almost two thirds of BEVs (61.6%) sold in the UK imported from EU plants, according to data from the SMMT.
Both the UK and wider Europe face steep competition from cheaper and more quickly produced Chinese EVs that are rapidly gaining market share.
Mike said: “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.”