German car suppliers could face thousands of job losses if a hard Brexit goes ahead

Rebecca Smith
Deloitte found a hard Brexit would put the brakes on German suppliers' revenues
Deloitte found a hard Brexit would put the brakes on German auto suppliers' revenues (Source: Getty)

A hard Brexit would threaten around 14,000 jobs at car suppliers in Germany, according to a new report from Deloitte.

The UK is the largest sales market in the EU for German suppliers, and Germany is the largest exporter of car parts to the UK. Deloitte forecast that in the event of a Brexit, without any trade agreement and World Trade Organisation duties, revenues of German suppliers would be hit to the tune of €3.8bn in 2019.

Around 42,500 employees in German suppliers rely on the British car market, the report added.

Read more: Sadiq Khan: London will lose 87,000 jobs under "no-deal" Brexit

The report, which analyses the interdependence of the British and European automotive industries, noted that German suppliers were interlinked in direct and indirect ways with the UK, including through delivering car parts to British car manufacturers.

One in five car parts installed in the UK originates from German manufacture, and around 30 of the largest German auto suppliers manufacture in the UK.

If there was a hard Brexit, Deloitte said that around 770,000 fewer cars would be sold by EU and UK car manufacturers in 2019, hitting revenues by around €20bn in the same year, or after a transition period.

Deloitte said the main short-term challenges looming after Brexit for the industry are the administrative burden from customs clearance, delays in delivery times and the impact of the UK's exit from the bloc on the "local content" status of car components. At present, all of those made in the UK are deemed as such.

The report said: "The proportion of these is critical in the recognition of duty-free products within a free trade agreement. Brexit means the UK exits from all EU free trade agreements and opens the 'local content' of many manufacturers to debate."

The UK car industry has previously issued warnings over a hard Brexit, with the Society of Motor Manufacturers and Traders (SMMT) calling for a transitional deal to stop the auto sector falling off a "cliff edge".

SMMT boss Mike Hawes said the industry needed "a comprehensive and bespoke trade agreement".

The EU is the UK's biggest automotive export market, accounting for more than half of all UK car exports. Some 80 per cent of the 1.7m cars built each year in Britain are exported.

Read more: Hitting the brakes: UK car sales drop more than five per cent

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