The Automotive Industry in the UK has been one of the most severely hit industries since the decision to leave the EU was made a few months ago. The entire industry has been fighting the impact of many uncertainties and trying to move forward, especially with negotiations on the terms of Brexit still in progress. The latest prognosis, however, isn’t good.
The latest updates from the industry and the country, in general, seem to suggest that the UK’s Car Industry is facing a tough set of challenges ahead. Will our automotive industry be able to survive the impacts of Brexit?
A Demoralising Future
Experts of the industry and economists, in general, agree that leaving the EU could undo some of the changes and progress made over the last several years. Car sales and production numbers continue to plummet, while sales after Brexit aren’t showing positive signs either.
Mike Hawes from the Society of Motor Manufacturers and Traders (SMMT) stated that Brexit could bring the UK’s automotive industry back several steps. There are a lot of things to prepare to anticipate the impact of Brexit, so it is not surprising to find new investments in the industry dropping in numbers and volume as well.
Out of all of the SMMT’s members, only 10% voted to leave the EU. 80%, an overwhelming majority, of the UK’s car industry and its players wanted the country to remain with the European Union.
Companies like Jaguar Land Rover and Toyota were fighting for improved regulations and a better investment landscape in general; the results of those fights aren’t as important for the industry today.
Prices to Go Up
Thanks to the new tariffs and other taxes introduced as part of the Brexit negotiation, it also won’t be surprising to see a huge jump in car prices in the near future.
Local manufacturers have already increased their prices in anticipation of Brexit, while bigger corporations will follow their move and start making adjustments to their prices soon.
Smaller manufacturers across the industry have had to take more steps than just increasing their prices. As a result of Brexit, many auto companies and companies making auto parts in the UK are now handling their budgets and financial situation with more care.
Better debt management strategies are being implemented to help maintain a steady level of business growth.
Bringing Back Non-Essential Investments
Last year, the entire auto industry invested £1.66 billion. This is far lower than the £2.5 billion invested in the industry in 2015, and the drop is a direct result of Brexit. What the government and key stakeholders need to focus on is bringing back non-essential investments in the industry and allowing the sector to thrive once again.
This means creating a more stable market and a clear post-Brexit path for the economy to follow. All of the uncertainty surrounding Brexit negotiations and changes in regulations must go. This will also help other industries beyond the UK’s car industry to survive such a difficult time ahead.
“The industry wants a lot more certainty,” according to Mike Hawes. The interim agreement the SMMT is fighting for may just be the answer.
