Brexit and the Automotive Industry
DOUBLE OUCH! That's the sound of my 401K after yesterday's historic vote in the UK to leave the European Union. Much has been written around the world about its impact by all kinds of political and financial pundits, so no need to repeat that here. However, what about our automotive industry? The last ten years have seen a resurgence in British car manufacturing, albeit most car makers are now owned by foreign companies. So will Brexit have an impact on the British automotive industry?
Some great insights from our friends across the pond:
Jalopnik's article What Great Britain Leaving the EU could Mean for the Auto Industry is very insightful with several interesting stats and graphics. 77% of the UK's manufacturers were in favor of staying in the EU with the remaining 3, VW, Vauxhall and Aston Martin being neutral. The automotive industry in the UK employs 161,000 people and has sales in excess of 61B UK Sterling.
In Carkeys, What Brexit would mean for the British Car Industry Paul Newton, director of industry and market intelligence for UK analysts IHS Automotive, says: "No manufacturing industry would be more affected by a vote to leave than automotive. It would be a serious setback for the industry and would surely result in some production sites relocating."" This point of view is supported by the German auto industry warns Brexit could lead to a production shift in Reuters. "The German auto industry alone has 100 production sites in Britain including suppliers", Matthias Wissmann, president of Germany's Auto Industry Association VDA, told a news conference on Thursday. "If there were a trade conflict between Britain and the European Union, the damage would be enormous for everybody."
Ward's Auto believes that UK automakers are set to retrench after the Brexit vote.
So closer to home, what do you think? Will the sale of British cars be impacted in the US? Or more importantly, will the financial issues caused by Brexit in general affect us, resulting in a reduction in US Car sales? And what will that do to US car dealership valuations?
