EU's made in europe strategy should extend to UK automotive supply chains

UK automotive supply chains are at risk of being left outside the EU's next wave of industrial support.

The Society of Motor Manufacturers and Traders (SMMT) has warned that the proposed Industrial Accelerator Act could unintentionally exclude UK operations from incentives designed to strengthen European manufacturing

As the European Union advances its Made in Europe framework, one of the world's most integrated manufacturing relationships is under threat. The UK and EU automotive sectors remain fundamentally intertwined despite Brexit. The EU exports over €9bn worth of automotive components to UK manufacturers every year, making Britain the largest single destination globally for EU automotive parts.

The wider UK–EU automotive relationship is estimated to be worth around €80bn annually, and UK factories remain the EU's largest export market for passenger vehicles, worth almost €40bn per year to European manufacturers.

The made in Europe framework

The EU's proposed Industrial Accelerator Act (IAA) is a central element of its broader Made in Europe strategy. The aim is to accelerate decarbonisation, strengthen domestic manufacturing capability, and reduce strategic dependence on overseas supply chains, and particularly in electric vehicles, batteries, and advanced technology components.

The policy is designed to make EU-based manufacturing more competitive against the US and China. The problem for UK manufacturers is the word "EU-based." The legislation as currently drafted may not extend its incentives, support structures, or preferential treatment to operations in the UK, even where those operations are deeply integrated into European production networks.

UK industry is pushing back

The Society of Motor Manufacturers and Traders (SMMT) has been in direct discussions with EU representatives in Brussels, warning that excluding UK operations from the Made in Europe framework would damage both sides of the channel.

The organisation's argument is straightforward: UK and EU automotive supply chains are not separate. Battery systems, electric motors, powertrain components, electronics, body panels, and engineered parts move repeatedly between the UK and EU during a single manufacturing cycle. Excluding UK operations from future incentives does not protect European manufacturing, it weakens it, by disrupting supply chain flows that have evolved over decades.

SMMT chief executive Mike Hawes put it directly: "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."

Disrupting that now, at the precise moment manufacturers are accelerating investment into electrification and battery production, carries serious commercial risk for businesses on both sides of the border.

The wider trade context

The automotive sector is navigating multiple shifts simultaneously. Following the 2025 UK–US trade agreement, the United States became the UK's largest export market for cars. The deal reduced US tariffs on British-built cars from 27.5% to 10% within a quota of 100,000 vehicles, providing meaningful support for premium and luxury manufacturers.

That success creates a more complex picture for logistics. UK automotive manufacturers now face significant volumes moving in three directions: inbound components from the EU, outbound finished vehicles to the US, and ongoing cross-border flows within integrated UK–EU production networks. Managing those flows efficiently, through correct customs classification, rules of origin documentation, and time-critical freight coordination, is increasingly demanding as trade policy shifts on multiple fronts at once.

What this means for automotive supply chains

For businesses managing automotive freight across the UK–EU border, the key near-term priorities are:

• Monitor IAA progress — SMMT engagement with Brussels is ongoing; the rules of origin and eligibility criteria for Made in Europe incentives are still being defined and subject to change
• Review rules of origin documentation — if the framework changes eligibility thresholds for EU content, existing supply chain flows may need to be reassessed and documented differently
• Build flexibility into sourcing — the debate about which components qualify for incentives under a future Made in Europe regime may affect supplier decisions for new model programmes
• Keep customs processes current — as trade policy develops across both UK–EU and UK–US channels, customs declarations and tariff classification need regular review to reflect the latest position

Logicall works with automotive manufacturers, component suppliers, and aftermarket businesses across complex UK–EU and international supply chains.

From inbound production logistics and UK–EU customs coordination to time-critical component distribution and multimodal freight management, we help automotive customers maintain continuity when trade conditions change.