EU Car Rules Could Be Biggest Brexit Blow Yet

The European car industry has urged the European Union to exempt the UK from planned "made in Europe" rules, warning that excluding British manufacturers would disrupt deeply integrated supply chains and weaken the bloc's competitiveness.

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The European Automobile Manufacturers Association (Acea) called on the European Commission to grant the UK, Turkey and Morocco "justified, targeted exemptions" from the proposed rules. Under the plans, only vehicles and components produced within the EU would qualify for subsidies and public procurement contracts.

European carmakers seek UK exemption

The measures form part of the EU's proposed Industrial Accelerator Act (IAA), which is designed to strengthen European industry against growing competition from heavily subsidised Chinese manufacturers.

Although aimed at reducing dependence on Chinese imports, the proposals could become one of the most significant economic consequences of Brexit for Britain's automotive sector because they currently apply only to EU member states.

Brexit impact and industry concerns

Acea said the European automotive industry continues to operate an integrated supply chain with the UK despite Brexit. It argued that vehicles, batteries and components produced in Britain should be treated the same as those made within the EU and have equal access to policy support.

The group's intervention comes as Britain seeks changes to the proposals during talks with Brussels. Europe Minister Nick Thomas-Symonds met EU Trade Commissioner Maroš Šefčovič on Wednesday, with the Industrial Accelerator Act among the issues under discussion.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed Acea's position, saying it reflected the close links between the UK and European automotive industries. He said he hoped EU regulators would take those shared interests into account when finalising the legislation.

Speaking at a London conference on Tuesday, Hawes warned that the proposals could effectively exclude UK-built vehicles from much of the European market. He argued that such an outcome would harm both sides because many UK factories are owned by European manufacturers and the UK and EU remain each other's largest export markets for cars and automotive parts.

Integrated manufacturing network

Acea's membership includes BMW, Volkswagen and Stellantis, which own the Mini, Bentley and Vauxhall manufacturing operations in the UK. Jaguar Land Rover, Ford, Toyota and Nissan are also members with significant production facilities in Britain.

According to reports, Nissan has privately warned that it could be forced to close its Sunderland factory if the rules are implemented without changes. More than half of UK vehicle exports are destined for EU markets.

Several Acea members also operate manufacturing plants in Turkey and Morocco, prompting the organisation to argue that excluding those facilities would leave existing European investments stranded and reduce the industry's competitiveness.

China competition shapes policy

The Industrial Accelerator Act is intended to help protect European manufacturing from an influx of lower-cost Chinese vehicles and components.

Earlier this week, the EU and China agreed to hold three months of diplomatic talks aimed at preventing a wider trade dispute.

Last month, several European trade groups warned that domestic industries risked being undermined by what they described as "China shock 2.0". Concerns have intensified after Volkswagen proposed cutting up to 100,000 jobs across Europe. The EU's trade deficit with China has reached around €1 billion a day and is forecast to approach €400 billion in China's favour by the end of the year.

While Acea is strongly influenced by German manufacturers, the Industrial Accelerator Act is largely driven by France, meaning any significant amendments would require the support of French President Emmanuel Macron. German Chancellor Friedrich Merz has also called for stronger action to address China's growing industrial advantage, citing the country's currency policy as a contributor to its trade surplus.

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10 July 2026