Japanese and Turkish car parts may not count as ‘local’ in Brexit blow

Phil Curry | 30 Sep 2020

Über den Autor

Phil Curry

Editor Daily Brief

Phil Curry, Autovista24 Editor, is a seasoned automotive journalist, always keen to seek out and explain the latest industry developments

Das Vereinigte Königreich in Rot auf einer Europakarte

In a new blow for UK-based car manufacturers, the European Union (EU) looks unlikely to sanction some third-party country vehicle parts as ‘British-made’, leaving the door open to tariffs on exports even if a Brexit deal is reached.

According to a letter sent to the automotive industry in the UK, and seen by the BBC, chief negotiator Lord Frost says one of their key priorities – that parts and components from Japan and Turkey count as British in any deal – has been rejected by the European Commission. Therefore the UK ‘obviously cannot insist on it’ according to Frost.

A separate draft legal text also asks the EU to treat battery-electric vehicles (BEVs) manufactured in the UK favourably, especially as many of the components within will not be supplied by UK-based businesses.


Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

However, car parts imported to the UK from Japan and Turkey are not treated as British, and therefore these will count against locally sourced and European components. This means that even if a trade deal is put in place, some vehicles could end up attracting tariffs when exported.

Brexit negotiators have tried to get the cumulation agreement extended for Japanese and Turkish components, with both markets currently supplying European factories under trade agreements, but with little success.

According to the BBC, the letter says: ‘I am sorry to say that so far they [EU negotiators] have neither been willing to discuss these nor share any proposed text with us.’

It is believed that discussions over the situation have stalled due to negotiators attempting to clear an impasse around fishing rights and subsidy powers.

Speaking to the BBC, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: ‘Given its importance to the economy and livelihoods and the damaging consequences of tariffs we need the sector prioritised in negotiations, not traded off against other industries.’

Electric issues

One big issue around the subject of cumulation is the manufacturing of BEVs in the UK. Currently, a majority of battery components are sourced and assembled outside of the EU, and therefore battery cells would significantly count against British and European parts.

The original Brexit deal negotiated by former prime minister Theresa May contained a route to minimise checks on what are known as ‘rules of origin’. That option was removed as part of the revision to the withdrawal agreement a year ago. But Lord Frost pointed out that the UK and EU27 car industries have jointly asked for such arrangements, including special consideration for electric vehicle exports.

Bad timing

The news will come as a blow to an automotive industry that is already mired in Brexit confusion, with the current transition period between the UK and the EU coming to an end on 31 December 2020. Without a trade deal in place, parts and vehicles will be subject to tariffs when imported and exported, potentially up to 10%. Should cumulation not include Turkish and Japanese components, a deal would be irrelevant until such a time that supply-chains can be amended – a move that would likely increase costs anyway.

In an additional blow, the UK recently agreed a free-trade deal with Japan, the first such deal following Brexit taking place at the end of January 2020. At the time, the automotive industry lauded the deal, however, if parts count against locally-sourced components, it nullifies any potential benefit from tariff-free imports.

There may also be a likelihood that the situation could see car making pulled out of the UK. Japanese carmaker Nissan has often speculated about the future of its Sunderland plant should a Brexit deal not materialise. The factory counts the Leaf BEV model amongst its output, and there is potential for the carmaker to move production elsewhere should components in the battery count against locally-sourced parts, meaning tariffs on exports. Japan also has a free-trade agreement with the EU, so by pulling production elsewhere, it could concentrate on shipping its leading BEV model to European markets tariff-free.

Das könnte sie auch interessieren

Podcast: Back to basics with Brexit, emissions and electric vehicles

28 Sep 2020

The Autovista Group Daily Brief team takes a look at some of the challenges the automotive industry is facing, besides the ongoing complications caused by...

Coronavirus could lead to numerous European automotive job cuts

07 Jul 2020

07 July 2020 In the wake of the coronavirus (COVID-19) pandemic and national lockdowns, the automotive industry is facing the very real prospect of further...

EU new-car registrations fall 22% in June

16 Jul 2020

16 July 2020 Generally, coronavirus (COVID-19) lockdown measures have been lifted across Europe, and dealers have been able to reopen. However, new-car registrations in the...

Ja, ich möchte mich für den Autovista24-Newsletter anmelden

* Pflichtfeld

Ja, ich möchte folgende E-Mails erhalten:
Autovista24: europaweite Nachrichten und Insights - Täglicher Versand von Autovista Limited, auf Englisch

In unseren E-Mails verwenden wir Pixel, die uns zeigen, wenn Sie unsere E-Mails öffnen, weiterleiten oder Links anklicken. Dies hilft uns, die Leistung und Wirksamkeit unserer E-Mails zu messen. Wir kombinieren dies mit den Informationen, die Sie bei der Newsletter Anmeldungen angeben haben und Ihren Browsing-Informationen, damit wir unser Marketing besser auf Sie zuschneiden und verbessern sowie Ihre Benutzererfahrung auf unserer Website personalisieren können. Indem Sie sich anmelden, stimmen Sie der Verwendung Ihrer Daten zum Zweck der Zusendung der ausgewählten E-Mails und der Verwendung von Zählpixeln zu. Sie können Ihre Zustimmung zum Erhalt unserer E-Mails und dem Verwenden der Zählpixel jederzeit widerrufen, indem Sie dem Link zum E-Mail-Präferenzzentrum folgen, der in jeder E-Mail enthalten ist, die Sie erhalten. Weitere Informationen über die Verarbeitung Ihrer persönlichen Daten finden Sie in der Eurotax Datenschutzerklärung.