Prior to the leave camp narrowly winning the Brexit vote in June 2016, the media brimmed with headlines such as ‘UK car production hits 12-year first-quarter high’1 and ‘UK car industry 'booming' as 2016 production tops one million’2. British-based car manufacturing darlings from titans Nissan3 and Jaguar Land Rover4 to smaller-scale firms McLaren5 and Aston Martin6 all expressed a commitment to continued global success from their UK sites.
Over a year later and many news outlets have switched to quite a negative view of how Brexit could affect the British automotive sector. Simultaneously, though, some exciting new models will be produced in Britain in the near future. Such media uncertainty reflects the sector’s own evolving and understandably cautious sentiments, all of which is no real surprise as even the politicians in the UK and across Europe are unsure of Brexit’s possible implications.
Production of car parts
When it comes to the components that go into each car, it’s true that a large percentage are currently imported from French, German and Eastern European parts manufacturers. And though the proportion of British parts that make up the average vehicle dropped from 80% to as low as 30% in the nineties, the Automotive Council has revealed7 that 2017 has seen the figure encouragingly rise back up to 44%.
Savvy business leaders across the UK’s automotive sector have been working tirelessly since the referendum to ensure that more and more car parts can be produced on home soil in an economically viable way. Brexit could actually be an excellent driving force behind a desire to bring more and more production ‘in house’ to our ultimate advantage. Britain is steeped in automotive heritage from motorsport to iconic models that shaped the world scene, so the UK remains an attractive place for foreign manufacturers to maintain a strong presence.
The sector’s skilled workforce
The Society of Motor Manufacturers & Traders (SMMT)† is constantly working to ensure that the government safeguards Britain’s automotive industry as robustly as possible and appreciates that many of the sector’s skilled workers are from other parts of Europe – something the SMMT is keen to see sustained after the UK has left the EU in whatever way in the future.
Forthcoming models made in Britain
Important new models set to be made in British car factories include the 2018 Nissan Leaf8, a leading electric car that will be made alongside the firm’s extremely popular Qashqai and X-Trail models, MINI’s own electric car debut that will be built in Oxfordshire9, the Range Rover Velar, new Evoque and hybrid models that will be made in the Midlands, and Aston Martin’s first SUV foray, the DBX, which will be built in Wales10.
Returning to the Qashqai, it has perennially ranked as the best-selling crossover in Europe and has commonly finished as the second-most popular car overall. European appetite for this extremely desirable Sunderland-built car is highly unlikely to subside, meaning good news for the UK automotive sector at a time when luxury SUV sales from Jaguar (F-Pace and E-Pace) and Land Rover (new Discovery, Velar, etc) remain high. MG, albeit now a Chinese-owned brand, has just launched a new model in the must-have crossover body style, and Jaguar’s electric I-PACE will undoubtedly generate swathes of sales across the world, including the US.
It works both ways
Just as British organisations and individuals can’t get enough of the cars from German luxury marques Audi, BMW and Mercedes, rapidly-growing economies like China, Russia and the UAE have for a long time been hungry for British brands such as Aston Martin, Bentley, McLaren, Range Rover and Rolls Royce.
It’s doubtful that the EU or Britain will act immaturely whatever Brexit agreements are eventually made, as both markets want to sustain their thriving automotive sectors. Price rises and the introduction of tariffs can hopefully be avoided, for everyone’s benefit.
A time of opportunity
Brexit negotiations are still very much at the stage where politicians in the UK and Europe haven’t stated anything concrete and much negotiation remains to be done, but with billions of pounds worth of investment having been made in the UK by a variety of car manufacturers, it’s inconceivable that many sites will close or significantly downsize, if any.
Toyota has come out affirming commitment to its Derbyshire site, for example, pledging to produce the next Auris there as long as a transitional Brexit deal is agreed12. The majority of voices across the sector just hope ‘no deal’ doesn’t transpire, which is a sentiment shared across other industries. French and German car-makers can’t afford to lose their huge market here in the UK, and a conveyor belt of tantalising models are set to be produced in the UK over the next couple of years.
Therefore, although the automotive industry is right to proceed cautiously with all options open, a Brexit deal will present it with not just challenges but a range of opportunities, too13.
Sources:
1. https://www.theguardian.com/business/2016/apr/28/uk-car-production-12-year-first-quarter-high-2016
2.http://home.bt.com/news/uk-news/uk-car-industry-booming-as-2016-production-tops-one-million-11364081960079