Brexit, the expected withdrawal of the United Kingdom from the European Union, could have disastrous consequences for the auto industry says Vauxhall Managing Director Stephen Norman.
Norman warns that the British car market could potentially collapse in the event of a no-deal Brexit, adding that a so-called hard Brexit could generate a 20-25% drop in new car sales as a result of tariffs being imposed on imported vehicles.
“September 2019 is the last normal month for the UK market,” Norman said. “If we get a hard Brexit, we will be entering uncertain territory. I do not know what the fourth quarter will look like - I’m trying to get my full year by the end of September. In the event of a hard Brexit [with no deal negotiated by the British government in its divorce from the European Union] the new car market could fall by between 20% and 25%. It could be higher - nobody knows.”
Despite the anticipated setbacks, Norman believes Vauxhall may benefit from the Brexit chaos. The brand, which has been marketed as one of the great British automakers since 1903, could capitalize on the nationalistic sentiment that may accompany Brexit. According to Norman, Vauxhall us already working on something “jingoistic” for its advertising,” which suggests that the brand is already preparing for the battle post-Brexit.
At the recent Frankfurt Motor Show, Peugeot S.A. CEO Carlos Tavares said politicians in the UK and the European Union need to reach a compromise to prevent a damaging no-deal Brexit. Tavares is convinced a no-deal Brexit will create a lot of upheaval in the auto industry and hurt both communities.
In the UK, UK car production has sunk by almost a fifth according to figures from the SMMT industry association. Although a variety of issues have been to blame, including falling demand for Jaguar Land Rover products in China, Brexit has been listed as a leading reason for the drop.
In addition, in June, Ford confirmed it would close its Bridgend, Wales, engine factory as part of an overhaul of its unsuccessful European operations in an $11 billion global restructuring. Honda has also said it will close its Swindon plant that manufactures the Civic compact car in 2021. Meanwhile, Nissan has scrapped plans to build the X-Trail SUV in Sunderland, northern England and Jaguar Land Rover will cut 4,500 positions worldwide, many of them in the UK.
Although many factors have influenced the business decisions of automakers, Brexit has been first and foremost on the industry’s mind. As an example, BMW will reduce output at its Mini plant in Oxford, England, by removing a work shift if there is a hard Brexit.