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British car industry faces slow death

ninA trentmann | die welt | 20 july 2016

Thomas Goettle, PA automotive expert, is quoted in an article in Die Welt discussing PA's post Brexit research on the carmakers that are most likely to consider leaving the UK following the EU referendum.

The report explains that the Brexit result will impact the car industry's future. Carmakers will review where they produce new models and may no longer allocate new production to UK factories, while Brexit uncertainty continues.

Brexit has various dangerous aspects for the automotive industry in Great Britain. Thomas says: “Uncertainty is the biggest poison and firms need reliability instead.” Thomas goes on to say that investment decisions within the next 12 months will define the next three to five years.

It will take a couple of years to clarify the relations and conditions between the UK and EU, which means British factories will lose production volume, says Thomas. “This would mean an incremental but steady decrease of utilisation for these sites. Carmakers will not necessarily replace production of obsolescent models.”

Managing through the Brexit automotive sector - report July 2016

 

UK car factories face uncertain future – post Brexit research on the carmakers most likely to leave the UK

 

download report

 

 

Until last year PA recorded good performance for UK car manufacturers; production increased by 5.2 per cent, jobs increased by 3.15 per cent and the revenue in the car industry increased by 7.1 per cent to a level of £71.6 billion. After Brexit, the number of new cars sold - currently 2.6 million a year - could decrease by five to ten per cent, PA’s report estimates.

The article goes on to say that PA sees Toyota and Honda as "leaver" candidates; without a good solution for the UK after Brexit these export-oriented carmakers might consider closing their UK production – a loss of 50,000 jobs, estimates Thomas. Three further carmakers could face difficulties. One of them is BMW’s subsidiary Mini, producing more than 200,000 cars near Oxford. The second question mark is the Japanese carmaker Nissan – its factory in Sunderland is responsible for a large proportion of cars produced for European markets. Vauxhall could even be forced to consider change as well.

Thomas says: “Nissan and Vauxhall are volume manufacturers with low profit margins.” He goes on to say that new customs' rules would damage the attractiveness of UK sites drastically. At the same time luxury carmakers such as Jaguar Land Rover, Rolls-Royce, Bentley or Aston Martin will remain in the UK. “In the premium and luxury market a possible increase in the price of the vehicles is not as problematic as in the mass market, says Thomas.

However, without the proper access to European markets, or the free movement of labour forces, the carmakers and their 16 factories are in danger of a dramatic change in circumstances. “Trading on WHO rules would mean a blow for the British car industry. Great Britain is renowned for manufacturers producing for mass export,” says Thomas. “This will be questioned by customs on cars of maybe up to ten per cent in the future and could lead to further deindustrialisation of the country,” concludes Thomas.

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