Brexit and the Auto Industry
“UK car production declines for 12th month”
“Nissan confirms plan to cut 12,500 jobs globally”
“Brexit: UK car production plunges”
That’s just a snippet of the headlines we’ve all become far too familiar with over the last few months. This blog isn’t politically motivated but aims to discuss openly the proposed (and current) impact of Brexit uncertainty on the UK Vehicle production and finance industries.
Of course, for CAVA, if there’s a drop in vehicle production, we want to know about it as it will potentially impact our business too, in a ripple effect.
Where does the industry currently stand?
Well, May saw the 12th month of decline in the British car production industry with a drop of 15.5%. Production has dropped by around a fifth since the start of the year.
We’ve seen several major factories close or cut budgets and jobs, including Nissan who recently announced a cut of 12,500 jobs globally, with 7000 workers based in the car maker’s plant in Sunderland.
UK new car registrations declined in June by 4.9% and the reasons behind this have been linked by many reporting in the auto industry as being due to a lack of consumer confidence.
Now this doesn’t mean that people aren’t confident in the vehicles, but the economy. It could be seen as a risk to commit to a purchase of a new vehicle when the economy is in a state of flux. It is understandable that in a time of financial uncertainty that businesses and consumers are avoiding and delaying financial decisions such as a new vehicle.
What does the future hold?
We’ve already reported recently that the future is very bright for electric vehicles. Despite Brexit talk having dominated the news since 2016, yes it really has been that long, there is hope.
The last couple of years has seen upheaval for the automotive industry, relating back to our headlines above, but there’s also been a huge focus on the industry’s impact on the environment. New legislation relating to vehicle testing and regulations are due to come into force in 2021, with an aim to reduce the environmental impact that vehicles cause, with a crackdown on emissions in particular.
This relates back to a previous CAVA blog on the impact of emissions charges on taxis and the impact on the taxi industry, with a decline in registrations over the last few years, however growth is expected to resume by 2023.
With various articles flittering about regarding the state of the UK vehicle industry, it is refreshing to see that British talent is still up there, holding significant impact and influence in the industry. This is again highlighted by Mike Hawes, boss of the Society of Motor Manufacturers and Traders. He’s written to our recently appointed new prime minister to highlight the strength of the car industry.
Again this relates back to the electrification of our vehicles, noted by Hawes as a “dramatic and exciting change”
When discussing the impact of Brexit on the automotive industry, which contributes £18.6 billion to the UK economy, Hawes commented;
“The UK sector remains strong, with high levels of productivity, a skilled and flexible workforce and first-rate research and engineering facilities, so we are well placed to take advantage of the opportunities that emerge.”
He did stress the need to “make the UK the most attractive destination for investors, creating an internationally competitive business environment and developing skills in new digital technologies”
“Above all, we must ensure the sector continues to enjoy – without interruption – preferential trade with critical markets around the world, including the EU.”
Would you look at purchasing a new vehicle in the current climate?