Is Brexit destroying the UK car industry?
Investment in UK carmakers falls by nearly 50% as no-deal fears mount
Carmakers have sent a “red alert” to the Government over fears of a no-deal Brexit after it was revealed that investment in UK manufacturers almost halved in the past year.
A new report by the Society of Motor Manufacturers and Traders (SMMT) shows that “fresh inward investment” into British carmakers fell to £589m in 2018, down by 46.5% on the previous year.
The industry body also found that the number of cars manufactured in the UK fell by 9.1% last year to 1.52m vehicles, the “second consecutive fall and biggest annual decline” since the financial crisis a decade ago, The Daily Telegraph reports.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The SMMT’s chief executive, Mike Hawes, said: “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert,” reports the BBC.
“Brexit uncertainty has already done enormous damage to output, investment and jobs,” Hawes went on. “Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.”
Responding to Hawes’s comments, the Government says it is working on “the broadest and deepest possible agreement” with the EU to “maintain the strength of our world-leading automotive sector”, Sky News reports.
It added that it is looking to increase investment to help carmakers produce the “next generation batteries” in a bid to make Britain a leading manufacturer of electric vehicles.
Is Brexit to blame for the industry’s downturn?
Yes, but it’s not the only issue facing the motoring industry.
The BBC’s business editor, Simon Jack, says investment in the motoring industry “comes in uneven lumps as old models are retired and new ones introduced over time.
“But even allowing for that, the plunge in new investment revealed this morning is stark,” he said.
Global carmakers invested around £2.5bn in the UK motoring industry in 2015, says Jack, but that figure has fallen every year since to the 2018 figure of £589m.
The biggest issue manufacturers face in the event of a no-deal Brexit are possible tariffs applied to vehicle exports, making them more expensive, The Telegraph says.
Manufacturers also frequently move components between their UK factories and plants based in EU states, a process that would become more difficult if stricter border checks are applied, the newspaper adds.
However, there are other factors outside of Britain’s divorce with the EU.
A “global economic slowdown”, particularly in China, a market that has been especially fruitful for UK manufacturers in recent years, has caused a number of headaches for carmakers across the world over the past 12 months, says Sky News.
“Confusion” over the future of diesel cars and the “new official fuel consumption figures” from the WLTP (Worldwide Harmonised Light Vehicle Test Procedure) system have also “added to the industry’s problems”, The Independent reports.
These factors led to Jaguar Land Rover announcing the loss of around 4,500 workers earlier this month, while the Chinese-owned London Electric Vehicle Company laid off 70% of employees at its Coventry plant as it anticipates a “challenging year” in 2019, the Financial Times reports.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Pros and cons of solar energy
Pros and cons Solar power could become the primary source of electricity worldwide by 2050 – but there are still clouds in the forecast
By Rebecca Messina, The Week UK Published
-
Post Office's Capture software to be reviewed over 'glitches'
Speed Read Solicitor representing accused postmasters says flaws in the IT system follow 'very similar pattern' to Horizon
By Arion McNicoll, The Week UK Published
-
How would we know if World War Three had started?
Today's Big Question With conflicts in Ukraine, Middle East, Africa and Asia-Pacific, the 'spark' that could ignite all-out war 'already exists'
By Harriet Marsden, The Week UK Published
-
Will Aukus pact survive a second Trump presidency?
Today's Big Question US, UK and Australia seek to expand 'game-changer' defence partnership ahead of Republican's possible return to White House
By Sorcha Bradley, The Week UK Published
-
It's the economy, Sunak: has 'Rishession' halted Tory fightback?
Today's Big Question PM's pledge to deliver economic growth is 'in tatters' as stagnation and falling living standards threaten Tory election wipeout
By Harriet Marsden, The Week UK Published
-
Stormont power-sharing in sight: 'good news' for Northern Ireland?
Talking Point Unionists vote to end two-year boycott after agreeing legislative package to address post-Brexit trading arrangements
By The Week UK Published
-
Why your local council may be going bust
The Explainer Across England, local councils are suffering from grave financial problems
By The Week UK Published
-
Rishi Sunak and the right-wing press: heading for divorce?
Talking Point The Telegraph launches 'assault' on PM just as many Tory MPs are contemplating losing their seats
By Keumars Afifi-Sabet, The Week UK Published
-
How would a second Trump presidency affect Britain?
Today's Big Question Re-election of Republican frontrunner could threaten UK security, warns former head of secret service
By Harriet Marsden, The Week UK Published
-
'Rwanda plan is less a deterrent and more a bluff'
Instant Opinion Opinion, comment and editorials of the day
By The Week UK Published
-
How the biggest election year in history might play out
The Explainer Votes in world's biggest democracies, as well as its most 'despotic' and 'stressed' countries, face threats of violence and suppression
By Harriet Marsden, The Week UK Published