SMMT urges EU to include UK under Made in EU framework

British automotive association, the Society of Motor Manufacturers and Traders (SMMT), has called on the EU to explicitly include the UK under the ‘Made in EU’ provisions of its proposed Industrial Accelerator Act (IAA), warning that ambiguity over the country’s status is already affecting investment decisions. SMMT Chief Executive Mike Hawes said the industry needs a political commitment ahead of the EU-UK summit scheduled for the summer—before the IAA completes its legislative passage, which could take at least a year.

The stakes underpinning the lobbying are substantial: as it stands, the EU-UK automotive trade is valued at approximately €80bn (US$94bn) annually, with each side remaining the other’s largest passenger car market. The EU sells more automotive components to the UK—€9.1bn annually—than to any other global market including even the US and China. Excluding UK-built vehicles and parts from IAA incentives, particularly those linked to fleet electrification and CO2 super credits, would therefore put the country’s automakers at a meaningful disadvantage.

The IAA, published by the European Commission on 4 March, aims to establish “Made in EU” requirements for public procurement and subsidies across strategic sectors including electric vehicles (EVs), batteries, steel, and clean technology. Its unambiguous purpose is to counter China and mitigate or entirely prevent the loss of up to 600,000 automotive jobs in Europe over the next decade. 

Countries with EU free trade agreements or World Trade Organization government procurement membership are expected to qualify as trusted partners, but the final list will only be confirmed after the Act is adopted. An automotive-specific annex currently requires vehicle assembly within the EU; this is something British automakers like Aston Martin and Jaguar Land Rover lack entirely. However, the approach is mutual among many luxury marques—Porsche actively markets that its vehicles are made exclusively in Germany.

The UK’s position on European trade relations is arguably no less murky than that of the IAA. The government is currently preparing legislation to enable what it describes as “dynamic alignment” with EU rules in certain areas, a process that supporters argue reduces border friction and deepens the trading relationship. Critics—almost entirely coming from the pro-Brexit wing of British politics—have framed it as a concession of sovereignty. 

For SMMT, however, the rationale is straightforward. Hawes argued that the IAA’s rules should not extend to treating the UK as an equivalent threat to China. “The objective was to bolster the competitiveness of European industry vis-à-vis the increasing challenge coming from low-cost countries,” he told reporters in Brussels. “We are not a low-cost country. The intention of this regulation was not to hit EU-UK trade.” The upcoming UK-EU summit is likely the soonest opportunity to secure the political statement SMMT is seeking.

Ultimately, the IAA was designed to build a more resilient European manufacturing base—a goal the UK automotive sector, highly integrated with EU supply chains over four decades, shares. Where friction may emerge is in the willingness to let China compete openly inside of their respective borders. Chinese EVs currently account for 7% of EU sales and are growing; the UK faces equivalent competitive exposure. But unlike the EU, the UK does not impose any distinct tariff barriers on Chinese-made vehicles. To the contrary, it is actively petitioning them to establish domestic production.