BERLIN -- Parts of the UK's car industry could move to central and eastern Europe if the country loses access to the single market in its divorce negotiations with the European Union, according to Matthias Wissmann, president of Germany's VDA auto industry association.
UK Prime Minister Theresa May has set a March deadline to begin the formal process to quit the EU and carmakers are concerned that Britain is heading towards a "hard Brexit," which would leave it outside the European single market and facing tariffs of up to 10 percent on car exports.
"If there's a 'hard Brexit' then we will see a shift to central and southeastern Europe," Wissmann was quoted as saying in Monday's Financial Times.
Countries such as Slovakia and Poland "are very attractive, have low labor costs and are part of the EU," he said.
The German auto industry alone has 100 production sites in the UK, including suppliers, and Wissmann said that a long period of uncertainty would dampen the incentive to invest.
Wissmann said that the UK's car industry could suffer a sharp decline in output, as has been the case in Italy, where production has tumbled to 500,000 cars a year from 2 million 20 years ago.
"If the UK doesn't want to suffer the same fate as Italy's car industry, it must be concerned to retain full access to the single market," he said.
A spokesman for the VDA, which represents companies including BMW Group, Daimler, Robert Bosch, Continental and Volkswagen Group, confirmed Wissmann's comments.
Wissmann had warned in June, prior to the referendum on membership, that a potential trade dispute between Europe and the UK would be a serious setback for the industry and result in some production sites relocating.
German automakers exported 810,000 cars to the UK last year, more than to any other country in the world. However, Wissmann, a former transport minister and powerful lobbyist, emphasized that the VDA's priority was to keep the EU together.
"The UK is an important market for us, but the EU market is much more important," he said. "If the EU were to fall apart, that would be a lot worse for our industry."