24 September 2018

Six months until Brexit and the UK auto industry shows signs of greater worry

As the Brexit date looms larger, and the prospect of a ‘no-deal’ scenario becomes ever more likely, the UK automotive industry is showing indications of how seriously it is taking the situation. Within the past week there have been statements from Jaguar Land Rover, MINI, Honda and the Society of Motor Manufacturers and Traders all expressing serious concern about the possible impact of such an outcome on the future of the European Union’s second-largest new car market.

Let’s not forget how important the automotive sector is to the UK economy. It turns over around 82 billion pounds a year and supports some 856,000 jobs in this country, 186,000 of them in manufacturing. The industry accounts for 12.8% of the UK’s total exports of goods and invests 3.65 billion pounds a year into automotive research and development. Such numbers are not to be taken lightly.

Last week, JLR, the UK’s largest automotive employer, announced that it would be cutting production as a result of falling sales and would be putting 1,000 workers in its West Midlands Jaguar plant at Castle Bromwich onto a three-day week. In fairness, not all of this can be attributed directly to fears over Brexit. Sales of JLR’s Jaguar XE model have been disappointing, partly due to the collapse of the UK diesel car market. Nonetheless, the decision comes hard on the heels of JLR chief executive Ralf Speth’s comments made at a zero-emission summit hosted by Prime Minister Theresa May which described a hard Brexit as “horrifying” and as something which would be “destroying investment in autonomous and zero-emissions.” He also warned that decisions taken on the back of Brexit fears would be irrevocable.

Meanwhile, BMW, which built almost 220,000 MINI’s last year at its plant in Cowley near Oxford announced that it would be bringing forward its annual summer maintenance shutdown to April next year. This, of course, would be directly after the UK is due to leave the EU on March 29th. I doubt if the shutdown date is coincidental!

Speaking on BBC 5 Live’s breakfast show last week, the head of Honda Europe, Ian Howells, stated that a no-deal Brexit would add over 60,000 additional items of paperwork to Honda’s supply chain. There is a growing tide of opinion within the UK for a second referendum on the Brexit issue. This, while seeming undemocratic, is something which needs to happen if the future of the British automotive industry is to be safeguarded.

Sam Ogle

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