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

14 July 2016

Several UK car factories face an uncertain future following Britain’s vote to leave the European Union, according to PA Consulting Group research. A period of uncertainty during talks between the UK and the EU over Brexit may prompt some overseas carmakers with UK plants to place their investment in model upgrades elsewhere in the world.

If the UK’s access to the single market is deemed inadequate, some UK factories could close because they would be uncompetitive. Plants run by Honda and Toyota are most at risk of closure after Brexit, according to the research.

The UK exports over 1.2m cars per year with over half going into the EU. The research suggests that, if current high levels of uncertainty following the Brexit vote continue, demand and sales could fall by 5 to 10 percent.

The leavers, the question marks and the stayers

The leavers - plants run by Honda and Toyota are most at risk of closure after Brexit. They are highly reliant on exports to Europe and have relatively low margins and profitability. Combined, they account for approximately 20 per cent of the vehicles made in the UK.

The question marks - Mini and Vauxhall are question marks. Although they have a strong British heritage, especially Mini, they have EU options.

The stayers – Jaguar Land Rover is a stayer.

Tim Lawrence, head of manufacturing at PA Consulting Group, says: “The current lack of certainty about tariffs places a question mark over the future of a significant number of UK plants and jobs. As the supply chain investment tends to move with Original Equipment Manufacturers’ volumes, the impact on UK jobs and the economy will be felt beyond the automotive industry.

“This uncertainty also comes at a time when automotive technology is changing fast. A lack of overseas investment in new technologies, such as autonomous and electric vehicles, could have a long term impact on the competitiveness of the UK industry.”

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Brexit and factory location decisions
Upcoming investment decisions

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