Brexit: How would Britain’s exit from the EU affect carmakers?
Leading people of car companies, even earlier, pointed out that the exit of Great Britain from the European Union could have a negative impact on the car industry. How does Brexit affect car manufacturers?
The decision of the British in a recent referendum influenced the decline of European shares, and car companies will not be immune to the latest political developments. Even before the vote, the British Association of Motor Vehicle Manufacturers and Distributors (SMMT) warned that Britain’s exit from the EU could result in increased production costs, which could jeopardize jobs.
Higher production costs unequivocally lead to an increase in the selling price, which can affect the global sales of car companies that have production facilities in the UK. Potentially endangered manufacturers include traditional car manufacturers, such as Jaguar, Land Rover, Rolls-Royce, Mini, but also those that have their plants in England, namely Nissan, Honda, Toyota.
However, those companies that do not produce complete cars in the UK can also have problems. There are many suppliers in the British Isles who produce components for car manufacturers. Only German car manufacturers in Britain have 100 companies that supply them with parts.
Should a trade dispute arise between Britain and the European Union, it would do enormous damage to everyone. That would be a big blow to the automotive industry and affect the shift in production, “said Matthias Wissmann, head of the German Automobile Industry Association (VDA).
Car companies could face declining sales. The British car market is one of the largest in Europe. The strong pound currency and low interest rates have affected the fall in car prices, which has resulted in an increase in car sales in Britain in recent years. In the British market, a record 2.6 million new cars were sold last year, and after Brexit this number could be 300,000 less. Evercore ISI analysts pointed out that after Brexit, car sales in the UK market will fall by 4.5%, and next year the decline in sales could reach 10 percent. Due to the fall in the value of the pound, cars could become more expensive. Interesting topic to know more about polovni traktori.
The biggest fear comes from uncertainty, which is confirmed by the words of the director of the Mitsubishi office in England, Lance Bradley: “Uncertainty kills entrepreneurship and the vote to leave will bring great uncertainty in at least two, and maybe up to five years.”