How regulatory boundaries could fracture integrated supply chains
Ola Källenius, chief executive of Mercedes-Benz Group, stated that excluding the United Kingdom from the upcoming ' Made in Europe' regulation would weaken the automotive industry on both sides of the English Channel. He made the remarks ahead of the European Union's planned implementation of the act, designed to counter growing competition from non-European manufacturers, particularly in China. The law aims to strengthen regional supply chains by setting thresholds for local content in vehicles sold within the EU single market.
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What happens if the UK is treated as outside Europe's industrial sphere?
The executive highlighted that many Mercedes-Benz vehicles assembled in Germany rely on engines, transmissions, or electronic systems sourced from UK-based suppliers, while British plants often depend on components manufactured in Germany, France, or Spain. Imposing different rules of origin for UK-sourced parts would force automakers to reconfigure logistics, redesign supply chains, or face penalties under the new framework. Källenius cautioned that such adjustments would not only burden manufacturers but also jeopardize jobs in regions where cross-border collaboration has long been a cornerstone of industrial strength.
If the UK is excluded from the ' Made in Europe' definition, Mercedes-Benz and other automakers may need to shift sourcing away from British suppliers to maintain compliance, even if those partners remain more efficient or innovative. This could lead to underutilization of UK capacity, increased reliance on distant suppliers, and a gradual erosion of the country's role in high-value automotive engineering. Källenius suggested the outcome would be a lose-lose scenario: the EU would lose access to skilled British expertise, while the UK would find itself marginalized from continental industrial progress despite geographic and economic proximity.
Why does Mercedes-Benz oppose excluding the UK from the ' Made in Europe' law? The company argues that the UK remains deeply integrated into European automotive supply chains, and excluding it would disrupt production, raise costs, and harm competitiveness for manufacturers operating across both regions.
Frequently Asked Questions
What is the intended purpose of the ' Made in Europe' regulation? The law aims to strengthen the EU's automotive industry by setting local content requirements for vehicles sold in the single market, countering competitive pressure from non-European producers like those in China.
Could excluding the UK actually benefit EU manufacturers? No, according to Källenius, such a move would weaken the industry overall by breaking efficient cross-border links that have developed over decades, ultimately making European production less competitive rather than more.