Strategic Sourcing: Managing the EU’s "Made in Europe" Act
The Society of Motor Trade Manufacturers and Traders (SMMT), Britain's largest trade association, is urging the EU to revise its proposed Industrial Accelerator Act (IAA) to maintain the UK automotive sector as a Made in Europe partner.
The appeal follows meetings between the SMMT and EU representatives in Brussels, where the organisation emphasised the significance of the UK automotive industry to the broader European sector. The trade association has requested clarity on whether the UK would fall under the regulation's scope, warning that exclusion from the Made in Europe policy could inflict substantial damage on both UK and EU manufacturing capability.
The IAA, proposed by the European Commission, represents a framework aimed at accelerating industrial investment and decarbonisation across strategic sectors, including automotive, steel, cement and aluminium. The framework is built on three main pillars: expedited permitting for industrial projects, establishing lead markets for clean industrial projects and bolstering investment in strategic sectors.
A key component of this framework includes a Made in Europe initiative in public procurement that could potentially exclude the UK from incentives available to EU-based manufacturers.
Exclusion from electrification incentives
According to the SMMT, the Made in Europe regulation in its current form would exclude Britain from incentives offered to EU manufacturers, particularly those linked to the electrification of corporate fleets. These fleets represent approximately 60% of the EU new car market, according to European Commission data.
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. 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 EU-UK automotive partnership generates €80bn (US$94.4bn) in value annually. Britain remains the EU's largest export market for passenger cars, and vice versa, representing an annual value of €39.7bn (US$48.4bn) to EU-based manufacturers, according to SMMT figures.
Additionally, the EU sells €9.1bn (US$11.1bn) worth of typical automotive components to the UK automotive sector annually, exceeding sales to any other global market, according to UN data from 2024.
Implications for supply chains
The incentives from which the UK could be excluded provide financial support for companies adopting low-carbon and zero-emission vehicle fleets, supporting manufacturers' ability to sell in EU markets.
The SMMT contends that preventing UK access to these incentives would disadvantage the sector, impacting production volumes and constraining EU supply chains.
The value of EU EV imports to Britain has increased tenfold since 2019, with almost two thirds of battery electric vehicles (BEVs) (61.6%) sold in the UK imported from EU plants, according to SMMT data. Both Britain and wider Europe face intense competition from cheaper and more rapidly produced Chinese EVs that are gaining market share.
Mike says: "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."