Nervousness over Brexit negotiations mar the Paris Motor Show

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Perhaps Europe’s most difficult roundabout is in the heart of Paris.

L’etoile, which circles the Arc de Triomphe, is huge, bewildering and full of cars. It is crucial, bringing together vast numbers of people, but when one thing goes wrong, it can grind to a halt. It feels like a metaphor for Europe’s car industry.


This week, the continent’s carmakers have been gathering here in the French capital. The Mondial, known to everyone as the Paris Motor Show, is a glossy marketing exercise in optimism. Yet talk to some of the executives, and you feel nervousness.

The fact that Europe’s car industry dislikes Brexit is hardly revelatory. There has been disquiet for a long while now, but now that nervousness is becoming more pronounced and overt.

Why? Most obviously the lack of progress in negotiations to sort out a post-Brexit trading deal. During my time in Paris, a succession of car executives told me that all they now hoped for was some clarity – a decision, rather than an impasse.

There are few industries more integrated, and knitted together, than the motor business. Engines are made in one country, gearboxes in another. The brakes come from one place, the seats from another.

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Paris Motor show is the European car industry’s most important showcase.

All these components are then assembled somewhere else entirely, before being sent off around the continent for sale. Which all works fine when both parts and cars can criss-cross borders.

But were the United Kingdom to leave the European Union without a trading agreement – a so-called No-deal Brexit – then all that changes.

The UK would have to adopt the rules of the World Trade Organisation and, in the case of cars, that means an import tariff of 10%. In an industry where profit margins sit in single digits, that would be a seismic change.

Alongside a gleaming green car, I find Yves Bonnefont, chief executive of the fast-growing French car company DS. He says he is “monitoring” what happens with Brexit, but worries that it will lead to rising prices for British customers.

“We will be adjusting our prices to reflect the economic situation,” he said “Our prices would fluctuate according to the economic conditions after Brexit.

“The auto industry is extremely cost-competitive. There is only so much that can be absorbed by the car-makers.”

The technologies on show in Paris take years to hit local showrooms.
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The technologies on show in Paris take years to hit local showrooms.

In the neighbouring display, there are Citroens and Peugeots. This is the realm of PSA, the French giant that is the second biggest car company in Europe, and which now owns Vauxhall.

Maxime Picat oversees its operations in Europe. He says “if there are tariff barriers coming, there will be an impact on the business”, an impact he predicts as “harsh”.

But it is another turn of phrase that he uses that strikes a chord. “We have to know the conditions and act in a Darwinian way, because we are in a chaotic time,” he tells me.

Darwinian? He means the need to adapt, but I put it to him that Darwinian evolution also leads to extinction. “Yes,” says Picat ruefully. “That is what we have to fight against. We do not know the consequences of Brexit. We must be efficient in order to survive what will happen in the future.”

There will be those who see this as scaremongering. Certainly the car industry has been no great supporter of Brexit, and that isn’t changing.

But this isn’t really about the rights and wrongs of leaving the EU – it’s about the disconnect between business and politics.

The simple truth is that many business leaders, across Europe and across Britain, feel that the Government does not understand their needs. They fear that the natural role of a politician is to negotiate until the last moment, to bluff as long as possible.

And they fear that by the time the bluff has been called, and the political deal has been finalised, it will be too late – that decisions will have been made that cannot be reversed. This is a story that you hear, with ever greater conviction, and from ever more businesses.

For two years, we’ve heard that clarity is the great demand. And, so far – whether you talk to carmakers, bankers, retailers or small businesses – it still seems to be missing.


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