Well it happened Brexit has hit the UK with full force as Britain’s “pint-of-beer-and-pie-man” voted to leave the EU. The implications of this decision are huge and it isn’t clear why UK Brexit voters favoured to leave the EU when you take into account that Europe is the UK’s 2nd largest economy with free trade access to 500m people across 28 EU countries and zones.
But democracy has risen and the consequences of this regressive leave vote will be felt for decades to come. After negotiating treaties and trade deals for the best part of 43 years the UK will have to undo the economic benefits that enabled it to become that 5th largest economy in the world.
The UK will have to negotiate it’s exit, a process that will take years. Europe is sure to put in place trade barriers to make it difficult for the UK to enjoy the free trade and travel access it once used to enjoy… for free.
And why shouldn’t Europe not do so, yet the Brexit campaign still believe the UK should be given special tariff concessions that allow it to continue to trade more or less as it currently does. That’s not going to happen.
In the wake of the successful Brexit vote Automakers called for tariff-free trade to be unaltered and warned that production and sales would be affected. The UK is the second biggest car market after Germany.
BMW owns Rolls Royce and Mini are uncertain what the Brexit vote will mean in the short and long term. Uncertainty is what affects the stock markets and drives down shares.
General Motors and Ford may well pull out of Europe to do what is necessary to keep their business interests competitive and profitable. Ford has three production plants based plants in the UK and could opt to close them and relocate it’s HQ permanently in the Euro Zone.
Aston Martin is also lobbying the British government to negotiate for tarriff-free access to EU markets. However the weaker pound will mean exports are cheaper.
Jaguar Land Rover sell 20 percent of stock into the EU. Tata Motors who own Jaguar saw shares fall by 12 percent as a result of UK voters deciding to leave the EU.
Japanese auto makers Nissan, Honda and Toyota have invested heavily into the UK primarily to export into the EU. Uncertainty and the probability of free-trade into the EU may well cause a slow down with future investments.
It may well be that Nissan, Honda and Toyota relocate their headquarters into Europe. During 2015 the UK car buying population purchased 2.6 million cars, 50 percent of those were built by German owned manufactures.
The UK built around 1.6 million cars in 2015, around 57 percent were exported to EU countries. German companies have invested into the UK with an estimated 100 production sites which includes suppliers.
Volkswagen has released a statement saying it is too early to say what impact Brexit will have on it’s sales and marketing operations in the UK including the future of it’s ultra-luxury brand Bentley.
Analysts expect new car sales to fall by 4.5 percent by the end of this year and a further 10 percent in 2017. In addition European car makers could loose a potential 8 billion euros in lost sales.
Meanwhile the PSA Group (Peugeot-Citroen) has indicated that it will raise the price of it cars sold in the UK to maintain profitability in the UK.