The Brexit effect on the UK car industry
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75 PER CENT OF THOSE IN BRITAIN’S MOTORING INDUSTRY WERE AGAINST BREXIT. NOW COMMENTATORS ARE LOOKING AT WHAT THE FUTURE HOLDS
With the British motor industry supporting some 800,000 UK jobs, the referendum result voting in favour of leaving the EU has gone against the wishes of three quarters of firms within the sector.
But the move away from the European Union could have a wider impact on the nation’s drivers as well as those involved in the automotive industry.
Here’s a rundown of what might change for motorists and UK car manufacturing as a result of Brexit.
UK motor industry
The Society of Motor Manufacturers and Traders says the automotive industry accounts for more than £69.5 billion in turnover and £15.5 billion of value added to the UK economy each year.
It directly employs some 160,000 people in manufacturing and a further 799,000 across the wider sector. More than 30 car manufacturers produce in excess of 70 models of vehicle in the UK alone, which is supported by more than 2000 component providers in the country. 1,587,677 cars rolled off UK production lines in 2015.
In short, it is one of the biggest industries that could be affected by a decision to opt out of the EU, especially when you take into account that 11.8 per cent of total UK exports are from this one sector — the majority of which end up in Europe. Speaking after the results of the referendum, Mike Hawes, SMMT chief executive, said, “The British public has chosen a new future out of Europe. Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests.
“This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment.”
According to a survey by the industry representative, 77 per cent of its members — large and small — said a vote to remain in the EU would be best for their business.
Japanese manufacturer Toyota, which produces cars and engines in Burnaston, Derbyshire and Deeside in North Wales, said in a letter to its workers on Monday: “If the UK leaves the EU, we think it unlikely that the UK can keep the current trading arrangements … and this would mean we would have to pay duties on parts and cars.”
Nissan, which has a long-established car plant in Sunderland, turning out half a million motors a year, even took legal action against Vote Leave for using its logo to back the campaign.
Last week, BMW voiced its concerns by saying a vote to leave “won’t make life any easier”.
Dr Ian Robertson, global sales and marketing director at BMW, said: “It’s very simple. We have no plan B. We will continue whatever the result and consider our next steps then. There’s no immediate issue. The UK is our fourth biggest market. But it could impact on future investment plans. If Britain leaves the EU there will be great uncertainty. We employ 8000 people directly in the UK and support a further 50,000 jobs. We also have a lot of UK employees working abroad in Europe.”
Ford said it “will take whatever action is needed” to keep its UK operations competitive in a sign the car group may be preparing to cut costs in the wake of the Brexit vote.
Stephen Cooper, head of Industrial Manufacturing at KPMG UK said there would be “very real implications” to the access of engineering talent as a result of the vote to leave.
“Manufacturers will need to consider their strategy,” he said.
“Firstly in retaining their non-UK workforce, secondly in attracting non-UK based expertise and thirdly, more long term and one for the government to support, in developing talent on a much greater scale than they do currently.”
But Cooper also said the move could be a positive step for UK-based carmakers. “We should not lose sight of the fact that this result can also lead to opportunities.
“A drop in the value of sterling could make the UK a magnet for trade, and the need to reshape trade policy may result in quicker decision-making, and reduced red tape.’
Buying a car
The RAC said there’s little evidence to suggest that the decision to leave the EU would make buying a car more expensive. The UK is one of Europe’s largest car markets, so it is widely expected that manufacturers will be keen to stay competitive.