SMMT Argues UK Car Supply Chains to Remain 'Made in Europe'

The Society of Motor Manufacturers and Traders (SMMT) has urged the EU to maintain UK automotive partnerships within its Made in Europe framework.

The trade association met with EU representatives in Brussels to discuss how the proposed Industrial Accelerator Act could affect cross-border manufacturing networks.

According to the SMMT, the EU sells €9.1bn (US$11.1bn) worth of automotive components to UK manufacturers annually. This is the largest volume sent to any single global market, according to UN data from 2024.

The components include everything from battery systems and electric motors to traditional powertrain parts and body panels.

Components and production flows

The EU-UK automotive partnership is valued at €80bn (US$94.4bn) annually. UK factories remain the EU's largest export market for passenger cars, worth €39.7bn (US$46.8bn) to EU manufacturers each year, according to the SMMT.

The trade association argues that the Made in Europe regulation could exclude UK operations from incentives offered to EU manufacturers. These incentives relate to the electrification of corporate fleets, which 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."

The SMMT has asked for clarity on whether the UK would be subject to the Industrial Accelerator Act. The trade association argues that excluding UK operations from Made in Europe policy could inflict harm to UK and EU manufacturing capability. The concern centres on whether UK-based suppliers and assembly plants would qualify for the same support mechanisms as their EU counterparts.

Integration across borders

The Industrial Accelerator Act is a framework proposed by the European Commission to accelerate industrial investment and decarbonisation in strategic sectors. These include automotive, steel, cement and aluminium.

The framework rests on three main pillars: faster permitting for industrial projects, creating lead markets for clean industrial projects and strengthening investment in strategic sectors. The permitting reforms aim to reduce approval times for new factories and production line conversions from years to months.

The SMMT argues that preventing UK access to incentives would put the sector at a disadvantage. This could impact production volumes and constrain EU supply chains. Many EU manufacturers rely on components produced in UK facilities, creating a two-way dependency that has persisted despite Brexit.

According to data from the SMMT, the value of EU EV imports to the UK has increased tenfold since 2019. Almost two thirds of BEVs sold in the UK, 61.6%, are imported from EU plants. This demonstrates the continued integration of manufacturing and sales networks across the Channel.

Fleet electrification programmes

The incentives the UK could be excluded from provide financial support for companies adopting low-carbon and zero emission vehicle fleets. They also support manufacturers' ability to sell in EU markets.

Both the UK and wider Europe face competition from Chinese EVs that are gaining market share. These vehicles are produced more quickly and at lower cost. The competitive pressure has intensified calls for coordinated industrial policy between the UK and EU to maintain manufacturing capacity and technological leadership.

Mike adds: "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.

"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 SMMT met with EU representatives to highlight the importance of the UK automotive industry to the wider European industry. The trade association is seeking amendments to the proposed Industrial Accelerator Act to keep the UK automotive sector as a Made in Europe partner.