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BRExit impact on british car industry

What Brexit impact will be on united kingdom's car industry

Today, 18 of June, the Brexit talks begin. The Brexit will have big impact on all British industries – including car manufacturers. Here’s a look on what Brexit impact could be on car industry.

Jaguar F-Type near Buckingham Palace

Jaguar F-Type near Buckingham Palace

Britain’s car makers have warned that the UK's departure from the European Union poses the “biggest threat in a generation” to the £72bn-a-year industry.

More than than half of the 1.7m cars rolling off UK production lines each year are exported to Europe and trade body the Society of Motor Manufacturers and Traders has warned of the risks of failing to secure a tariff-free deal present as Britain officially invoked Article 50.

Nissan Factory in Sunderland, UK.

Nissan Factory in Sunderland, UK.

The car industry is one of Britain’s biggest exporters, responsible for 12% of the country’s goods exports, and there are concerns that without a trade deal being hammered out or a transitional agreement, a 10% levy could be slapped on cars.

Motorists would also suffer with prices of imported cars could soar by £1,500, according to industry calculations.

It is not just finished cars that would face problems: the average car has about 30% UK-made components, with the rest coming from abroad.

Current customs arrangements mean these parts move across borders easily without levies or paperwork, but this freedom of movement could be under threat.

Nissan factory in Sunderland, UK.

Nissan factory in Sunderland, UK.

In total, the SMMT believes the sector could take a £4.5bn hit, with the 10% tariff adding £1.8bn to the cost of fully assembled cars and £2.7bn to those exported to the EU.

Almost 170,000 people are directly employed by the sector and a further 600,000-plus positions supported by it, according to the SMMT, and there are fears jobs could go without a deal.

Jaguar Land Rover, Britain’s biggest car maker producing more than 500,000 vehicles at its Midlands plant each year, also raised the prospect of the harm controls on employing staff from the EU could have.

A spokesman said the that 1,000 of the 40,000 UK staff are EU nationals, with many of them employed in highly skilled product development roles.

THE BREXIT IMPACT ALREADY

Nissan has warned that it could shut down their car factory in Sunderland, UK. The site employs more than 7,000 people and supports another 28,000 supplier jobs.

While most of the potential effects of Brexit will not truly be known until we are further down the line in terms of negotiating how British trade with Europe and the rest of the world will work, one thing that is already being felt within the car manufacturing industry is the impact of the pound losing value.

The reason for this is that cars tend not to be manufactured in their entirety at one location, with parts such as engines being manufactured in separate countries to where the cars are assembled. As the pound has weakened since the Brexit referendum, this has made buying parts from other countries more expensive and pushed up costs for UK manufacturing plants.

Nissan has warned that it could shut down their car factory in Sunderland, UK. The site employs more than 7,000 people and supports another 28,000 supplier jobs.

Cars, which have been produced in UK, lined up next to Buckingham Palace. Segment from Top Gear Season 20 Episode 6.

Cars, which have been produced in UK, lined up next to Buckingham Palace. Segment from Top Gear Season 20 Episode 6.

What could brexit deal end up being like?

A leaving EU member-state will not have a better deal than being a member of EU.

Well, UK car manufactures have said it is vital that UK has access to the EU single market. If UK doesn't have access to the single market the car manufacturing industry in UK will have a big loses.

Many EU leaders have said that UK will not be allowed ''cherry-pick'' EU policies which it likes saying that ''Brexit is Brexit'' and UK will not have exclusive access to single market while being out of EU, the so called ''Norwegian Model''. Also saying that leaving EU member-state will not have a better deal than being a member of EU.

It all yet to be seen as Brexit talks begin. But there could be a trade deal between the EU and UK, that most likely to be after EU negotiations.

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Comments (1)

  • Silly EU sounds like it's got its nose a bit out of joint. Good.

      4 years ago
1