Different Automakers Have Different Decisions About UK Business Due To Brexit

Luxury carmaker Aston Martin is continuing with the construction of a new plant for assembling vehicles in Wales and the company has already completed setting up of the paint shop and currently robots are being got ready to be deployed. And despite the uncertainties of Brexit, the company is stead fast to start production of the new sport utility vehicle which is crucial for the company, by the current year.

“I still have to believe that we’ll get to a proper and right decision because a no-deal Brexit is frankly madness,” Aston Martin CEO Andy Palmer told the media at the company’s Gaydon headquarters in England. The company is now busy to finalize the product portfolio of the company for the 2020s and beyond.

In recent times weeks however, news from the United Kingdom have focused more on announcements of plant closures and job losses in the auto sector before the setting in of Brexit.

The production of the new X-Trail SUV of Japanese car maker Nissan has been shifted from the UK to Japan while its only factory in the UK would be closed down by Honda in 2021 which would result in job losses of up to 3,500. While Nissan has squarely put the blame for its decision on Brexit, Nissan Honda has not done so.

But at the same time, there are other auto companies such as the luxury car maker Aston Martin and mass market brand like Vauxhall that are striving hard to continue even after Brexit – irrespective of UK’s divorce with the EU on March 28 comes with a trade deal or not.

For Vauxhall, the exit of the UK from the EU is an opportunity for the company to increase the market share of the brand, said the car maker’s boss Stephen Norman despite the uncertainty of what will happen after Brexit. The company is getting ready for launch of an aggressive marketing campaign to push for its moderately priced cars and SUVs.

The decision of some auto makers to continue to invest in eth UK operations and the sale scale optimism by others like Vauxhall shows that there is a stark contrast between how different auto makers see Brexit – as an opportunity for increase sale or a hazard for their supply chain. Experts point out that the primary factor for that lies in the size of operations of the companies and the position of the respective production cycles of the companies.

All said, UK based companies would in any case have to find ways to tide over Brexit, even though for the short term. .

It would not be possible for Nissan to immediately shift production out of the UK because it makes nearly 450,000 cars and multiple models. In contrast, only one model – the Corolla, is manufactured by Toyota in Britain, and that too has been in production for not long. Typically, the production life cycle of a model in eth auto industry is seven years.

On the other hand, Aston Martin and Vauxhall have significant manufacturing operations in the UK and employs thousands of people in the country combined. According to the heads of both the companies, the impact of Brexit would take longer to play, more pervasive and more complicated than is being portrayed by the government and is believed by the public.

The concerns for the two companies are also not different. While Palmer is more worried about disruption to his company’s supply channel which would impact the production system, for Aston the worry is the delay of its motor parts because of new border checks and tariffs. But whatever the situation after Brexit, because of their significant presence and investments in the UK, companies like Nissan, Aston Martin and Vauxhall would not find it easy to shift production out of the UK while it could be much easier for Toyota to relocate production of its only model in production out of the UK.

Therefore while a gloomy picture of some auto companies deciding to close plants and leave the UK, there are some which are ready to tide out the Brexit woes.

(Adapted from Reuters.com)

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Categories: Economy & Finance, Geopolitics, HR & Organization, Regulations & Legal, Strategy, Sustainability, Uncategorized

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