The UK automotive sector has issued a stark warning today, April 16, 2026, claiming that a massive £70 billion annual trading relationship is under immediate threat. The Society of Motor Manufacturers and Traders (SMMT) has raised the alarm over a new piece of European legislation that could effectively lock British-built cars out of the continental market.
At the heart of the dispute is the EU Industrial Accelerator Act (IAA). As currently drafted, the Act’s “Made in Europe” provisions would exclude UK-manufactured vehicles from receiving critical tax breaks, government grants, and CO2 “super credits.”
A Systemic Disadvantage
The SMMT warns that these rules would put UK factories—such as Nissan’s massive plant in Sunderland—at a systemic competitive disadvantage. The EU is the UK car industry’s most important partner; roughly 57% of all British-built cars are exported to the EU, and the market is heavily dominated by corporate fleets (around 60%) that rely on the very tax incentives the UK is set to lose.
Mike Hawes, Chief Executive of the SMMT, stated that excluding the UK from these incentives would not only damage British jobs but would also hit EU manufacturers who rely on UK-built components and supply chains.
Key Risks Identified:
- Trade Value: The mutual trade in automotive goods between the UK and EU is worth nearly £70 billion (€80 billion) every year.
- Electric Transition: The move threatens to derail the transition to electric vehicles (EVs) at a pivotal moment, potentially leading to higher prices for consumers.
- Investment at Stake: Industry leaders fear that if the UK is no longer seen as a “trusted partner” for European assembly, future investment in UK gigafactories and EV platforms could dry up.
The UK government and the European Commission are being urged to resolve the situation ahead of a critical bilateral summit this summer. Experts suggest that failure to grant the UK “equivalent treatment” could be seen as a breach of the post-Brexit Trade and Cooperation Agreement.
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