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How is Brexit Likely to Affect the Auto Industry?


After Britain voted to leave the EU, businesses across the country were left with huge uncertainty over how it would affect their future. The auto industry is one sector in particular that’s facing significant worry.

According to a recent study, auto manufacturers could experience a loss of over 2.8 million sales when the UK breaks away from the EU. So, how can businesses within the auto industry protect themselves from the potential increase in costs and drop in sales when Britain leaves the EU?

Major Manufacturers likely to focus on other European markets

Before Brexit, the UK was seen as one of the best countries to be for major auto manufacturers. Many international companies moved their operations to Britain in order to benefit from its European market reach. However, now the country is leaving, it’s uncertain how long major brands such as Toyota and Ford will remain.

The two main issues affecting the auto industry after Brexit is increased importation rates and sale prices. Dealerships will no longer be able to import European models as cheaply as they could before. So, in turn they’re likely to need to up their prices; something many potential buyers will be unable to afford.

The number of cars coming into the UK is likely to drop significantly as a result. This is what experts claim could lead to the death of the UK auto industry. However, it’s unlikely to be that dramatic, and in the long-term some experts are even confident Brexit won’t affect the auto industry.

What can businesses do to protect themselves?

Businesses operating within the auto industry do have several options to help them survive Brexit. Those who succeed will be companies which see the opportunity in exiting the EU.

While importation rates will be higher, the best way to combat this would be to hire British talent to bridge the gap. Hiring more talented employees is one of the first things businesses should look into. There’s a huge opportunity for British manufacturing to take over once the deal goes through and this will help to beat the increased cost challenge the sector is facing.

Businesses can also look into changing suppliers and couriers. These days’ there are hundreds of couriers out there; some that even focus specifically on auto parts such as Inxpress. They’re a national company so you won’t need to worry about inflated costs and they specialise in timely, simple deliveries.

More will also need to be done to encourage investment from foreign manufacturers into the UK. The future of the industry is so far unclear, but deals are still being made by the Prime minster to negotiate a good exit strategy. So, investment opportunities will likely depend upon the outcome. If it is to survive, the industry will need to both attract and retain investments.

Finally, a lucrative trade deal would help to ease concern for businesses within the sector. If high import and export prices can be avoided, Brexit will have very little impact overall. At the moment, 12pc of the goods exported from Britain are auto-related, so agreeing upon an attractive trade deal would be beneficial and vital for the government.

Overall, although the initial shock and uncertainty has died down after the Brexit vote, little has been achieved to ease the fears of businesses within the sector. However, as mentioned above, there are ways companies can protect themselves against the potential fallout. Only time will tell whether Brexit will have a long-term negative effect on the auto industry.

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