Car Industry Hits ‘Red Alert’ by Aminah Ayub

Investment in the UK car sector has almost halved and output has reduced. Why? Of course, it is none other than Brexit!

 

The Society of Motor Manufacturers and Traders (SMMT) chief Mike Hawkes states that Brexit uncertainty has resulted in enormous damage. This is indicated in the fact that, in 2017, inward investment was valued at £1.1bn compared to £588.6m in 2018, a staggering decrease of 46.5% .

 

However, many say that, so far, the impact on output, investment and jobs is nothing compared to the permanent devastation that will be caused by cutting off the UK’s trade links especially with the EU.

 

The EU accounts for the majority of UK exports, 52.6% of cars. EU sales fell by 9.6%, and so undoubtedly, worries are high about the further impact Brexit will have on exports and in turn the UK car industry. Although exports to the EU fell, exports to the US increased by 5.3% this perhaps is a positive indication that post-Brexit, the car industry will not remain in ‘red alert’. However, Mr Hawes warns that that this improvement could be reversed If tariffs are imposed in post-Brexit tax changes.

 

In addition to this, in early January 2019, JLR confirmed that it would be cutting 4,500 jobs with the majority coming from its UK workforce. As well as blaming the uncertainty that Brexit has caused, JLR faces other challenges including a sales slowdown in china and a slump in demand for diesel cars. Expectedly, these job cuts have caused job insecurity amongst workers, however car workers have also had to deal with the mounting economic uncertainty, not knowing what their future entails.

 

It is unknown how long the car industry will continue to suffer. Perhaps, post-Brexit, trade deals may be negotiated that will help to move the UK car industry out of ‘red alert’. However, the industry is being affected by many other factors too, such as consumer perception, demand and the environmental impacts.

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