European car manufacturers are concerned that a new EU-Japanese trade deal could see them lose ground in the UK to Asian rivals, according to UHY Hacker Young.
Paul Daly (pictured), partner at the national accountancy group, said that the phased removal of the current 10% tariff on imported Japanese cars would give Japanese manufacturers scope to cut prices, which could win them greater market share in the UK.
Coming into effect on February 1, the EU-Japan deal will immediately cut the current 10% tariff on Japanese cars imported into the EU to 9.2%.
By its 13th year, EU import tariffs on cars manufactured in Japan will fall to zero.
Daly said: “The EU-Japan trade deal is set to be a significant help for Japanese car sales in the UK. European manufacturers will be concerned that their market share could be impacted by reduced prices on Japanese imports.”
While the UK will only benefit from the EU-Japan deal up until the UK’s planned exit from the EU on March 29th, the two countries have already agreed in principle to a replacement deal post-Brexit.
An expanded trade deal with Japan is important as its brands currently account for 17.1% of new cars sold in the UK, according to the Society of Motor Manufacturers and Traders (SMMT).
“The picture is complicated further by the fact that a no-deal Brexit could eventually lead to the addition of tariffs on European cars by the UK, further assisting Japanese manufacturers in competing on price and marketing spend,” said Daly.
“If both the EU and Japan are granted 0% tariffs on UK imports, we may see greater price competition between European and Japanese brands, which would ultimately benefit consumers.”