A No-Deal Brexit Is Catastrophic For the Automobile Industry

A no-deal Brexit is going to create huge problems for the European automakers, a message that was communicated by 23 automotive business associations across Europe. They have joined forces in the attempt to send out serious messages of caution against a brutal exit from the bloc by Britain, where auto giants BMW, Peugeot PSA, and Japan’s Nissan have factories.

No-Brexit Industry Hit

Industry analysts predict that the no-Brexit scenario will progressively affect various manufacturing sectors, including the automobile industry. Sadly, it is not just limited to the UK but will also affect global markets.

According to a study conducted by IHS Automotive, the move by the UK to break away from the EU could ultimately cost vehicle manufacturers more than 2.8 million sales in the next two years.

The report, which was presented by Autonews, predicts a drop of more than 200,000 in worldwide vehicle deliveries this year alone, a phenomenon purely triggered by Brexit alone. Over the next year, the drop is projected to increase to 1.25 million, and 1.38 million in 2018.

 The car manufacturers are worried about how additional duties and administrative burden on automotive parts and vehicles will create a huge amount of friction in the automotive trade. Britain is home to a large foreign-owned car market, of which some have already wound up their factories and others are planning to.

Options Ahead

The automobile fraternity is right in pushing for an extension on the exit date, to avoid a no-deal move out by Britain. Speaking to the media, the Chief Executive of the Society of Motor Manufacturers of Traders (SMMT) Mike Hawes has said, that, “Leaving without a deal would be the worst outcome. If it takes an extra couple of months to get that deal, I think the industry would put up with that.” Britain has time till the end of October to exit with or without a deal from the European Union and British PM Boris Johnson has not spelled out any clear.

terms of the exit. On the flip side of this, Boris Johnson’s government is urging companies to ramp up their efforts to prepare for a no-deal Brexit. Some have done so and incurred losses already. But not everyone can repeat plans in place.   

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