Brexit will reduce the annual 2020 car production in eth United Kingdom to about half of its planned production output made just a few years ago even as the auto production kin the country is already down significantly.
According to data published by the UK Society of Motor Manufacturers and Traders, there was a 4 per cent drop in October in the number of vehicles produced in Britain. There has been a decline in car manufacturing now in 16 of the 17 past months.
“Yet another month of falling car production makes these extremely worrying times for the sector,” SMMT chief executive Mike Hawes said in a statement. “Our global competitiveness is under threat.”
Moreover, there is slowing global demand and sale of cars. However the drop in production in the UK is steeper compared to the global average which is because of three continuous years of uncertainty surrounding Brexit. The industry is still fearful that they would find doing business very difficult after Brexit because of potential hurdles of exporting British cars to the European Union which accounts for 57 per cent of the total auto exports of the UK.
The UK car industry could face new tariffs and an even more dramatic decline in production if there is a Brexit without a trade deal with the EU, according to the SMMT. Under the circumstances of a hard Brexit, carmakers would be forced to shift production units outside of the UK which would further reduce the auto production capacity to about just 1 million vehicles by 2024, the group had said earlier this week.
“Rather than producing 2 million cars a year by 2020, a … worst case scenario could see us making just a million,” Hawes said in a statement.
So far this year, there has been a drop of auto production in the UK of 14 per cent year on year. Analysts said that the total production in the country is set to remain within a total production of about 1.3 million cars in the country. According to Fitch, a credit ratings agency, in 2019, it is expected that the global sale of cars will drop by 4 per cent.
There are concerns among those global automakers who have built factories in the UK about the country leaving the EU without any deal. Under such a situation, there would be disruption in the supply chains of the companies, delay production and cut into profit margins that are already very low. A domestic political stalemate over Brexit is expected to be addressed by the outcome of a general election on December 12 in the UK. But that would mean little for the UK car makers.
The UK will be left with less than 11 months to negotiate a new EU trade deal if it is assumed that the UK officially finally leaves the EU by the end of January as promised by UK Prime Minister Boris Johnson.
“We need to work closely with the next government to ensure frictionless trade, free of tariffs, with regulatory alignment and continued access to talent in the future,” said Hawes, who added that continued preferential trade with the European Union and other markets “will be essential to keep automotive in Britain.”
(Adapted from CNN.com)