German industry chief warns of huge hit to car sector if UK and EU don't reach trade deal

HAMBURG, GERMANY - JUNE 10: A freight train loaded with cars stands at Hamburg Port during the novel coronavirus pandemic, on June 10, 2020 in Hamburg, Germany. According to Germany's Federal Statistics Bureau Germany's total exports fell by 31% in April as compared to one year ago. Lockdown measures have since largely eased and most factories have resumed production, though supply chains remain fractured. (Photo by Morris MacMatzen/Getty Images)
A freight train loaded with cars at Hamburg Port on June 10, 2020. According to Germany's Federal Statistics Bureau total exports fell by 31% in April as compared to one year ago due to the pandemic. Photo: Morris MacMatzen/Getty Images

German businesses are watching nervously as the clock ticks down on negotiations between the UK and the European Union to secure a trade deal, according to the director of Association of German Chambers of Industry and Commerce (DIHK).

In an interview with the Augsburger Allgemeine newspaper published Monday, DIHK managing director Martin Wansleben said “there is growing concern in the economy that the Brexit negotiations will fail.”

Wansleben said that the automotive industry would be badly affected if both sides can’t agree on a deal, by tariffs as well as by "broken supply chains and long waiting times at the borders, as there is still no functioning infrastructure for customs clearance on the British side.”

"For the automotive industry alone — which has the largest share of the trade volume between Germany and Great Britain — there is a risk of tariffs of at least two billion euros in less than four months without an agreement," Wansleben said.

His warning echoes the joint appeal by UK and European automotive industry leaders this weekend, urging negotiators to reach a free-trade deal, or risk “sever repercussions” for the sector, which employs 14.6 million.

Watch: Yahoo UK’s Finance Reporter, Edmund Heaphy explain what a no-deal Brexit actually means, and its potential consequences...

READ MORE: UK car makers face £102bn 'no deal' Brexit cliff-edge

The Society of Motor Manufacturers and Traders in the UK, the European Automobile Manufacturers Association and the German Automotive Association said in their joint statement that failure to seal a deal could results in trade loss worth up to €110bn (£102bn, $130.2bn) over the next five years — a “bleak picture” for an industry already devastated by the coronavirus pandemic.

Wansleben noted that the years of Brexit uncertainly have already taken their toll on German exports to the UK.

“Since the referendum in 2016, German exports to the British island have fallen noticeably - from €89bn in 2015 to €79bn in 2019,” he said. “As a result, the United Kingdom has slipped from third to fifth most important export market in Germany.”

"The trend is continuing this year - and will be exacerbated by the Corona crisis," Wansleben added.

READ MORE: Automotive industry no longer growth engine of German economy