Although the country’s own roads are lined with Nissans, Audis, Volkswagens and BMWs, Britain’s car manufacturing industry is thriving. At least, it was until June 24th 2016. The E.U. referendum hung a huge question mark over the entire UK economy, but what, specifically, does it mean for the motor industry?
How well was the British automotive industry doing pre-Brexit?
Though British drivers appear to prefer foreign-made cars according to a recent poll of the most popular cars, UK car makers were doing extremely well before the referendum.
For many, the Golden Age of British automobile manufacturing will always be the 1970s, but car exports actually reached a record high in 2015. 1,227,881 cars were exported from UK manufacturers last year, that’s 2.7% up from 2014. Aston Martin, Bentley, Jaguar, Land Rover, Mini and Lotus all had great years, with 77.3% of British-made cars exported.
But in the same year demand from China fell by 37.5% while demand from Russia fell by 69.4%. So how was the UK car industry doing so well? The sad truth is, Europe was the UK’s biggest customer. EU demand grew 11.3%, with 57.5% of UK exports going to the continent. The CEO of SMMT (the company behind these figures) says membership of the European Union was “vital” for securing growth and jobs in the automotive sector. So does this mean that Brexit could bring about the end of this great success?
What are the post-Brexit prospects?
The UK’s vote to exit the EU has put the country’s trading arrangements in jeopardy. As was widely discussed during the referendum campaign, UK companies currently trade with EU countries without any tariffs. Outside of the EU, it is possible that the UK will have to pay the same tariffs as other non-EU countries.
The counter-argument to this from Leave advocates was always that the EU needs our exports too badly to impose tariffs. However, with the even stronger German automotive industry as one of the EU’s most enthusiastic members, it seems unlikely that EU states would have so strong a need to keep on buying British.
The EU could even impose quotas on the UK, limiting the number of vehicles the country can export to the union’s 27 remaining members.
All of this uncertainty has lead market analysts to revise down their forecasts for the once bright future of the UK car industry. At most, analysts expect growth to fall to 1% in 2017; which is less than half of last year’s growth.
Can UK car exports continue?
With numbers falling so rapidly, and potentially devastating trade tariffs with its biggest customer, is the UK automotive industry doomed to extinction? Probably not.
While the period of record-breaking success may be over, UK cars still sell very well in Australia, South Korea, Japan and Turkey, where demand has risen 53.7%, 55.2%, 35.4% and 41.1% respectively.
Leaving the EU also means that the UK will no longer be subject to the TTIP trade deal, which critics argue is harmful to workers’ rights. So it seems what while Brexit might not be all good news for the UK car industry, there hope for its continued growth.