What Brexit means for the car industry

On the 24th of June 2016, following a majority vote of 51.9% in the Referendum that has famously kicked off the official path towards ‘Brexit’, Britain announced its decision to leave the European Union. And even though this decision was met with a not so surprising overwhelming disbelief and a series of protests, on 29th of March 2017, the British government invoked Article 50 of the Treaty on the European Union, subsequently reinforcing their solid decision to leave the EU for good.

Left with uncertainty

It has been made clear already that many UK industries will be suffering during the movement towards the either ‘soft’ or ‘hard’ Brexit. When focusing on the car industry however, Britain has seen a massive drag down in sales. Many motor manufacturers are now facing an uncertain future, with fears that the industry’s revival over the past couple of decades could be reversed.

Fear of the collapse of the Single Market

Since 1973, when Britain first joined the EU and its single market, the car industry faced a huge transformation due to brand new exportation and trading access for no extra cost. Leaving the EU, however, as a result will increase the trading costs, undermine competitiveness and make Britain an a lot less attractive place for investment.

The Society of Motor Manufacturers and Traders (SMMT) did not back Brexit

Before the referendum a survey of the SMMT’s 700 members, which include manufacturers such as Jaguar Land Rover, Nissan and Toyota as well as small and medium sized supply chain companies, found that 80% wanted Britain to stay in the EU, with only 10% backing leave. The SMMT’s analysis suggests that “The UK motor industry faces a £4.5 billion tariff cost for cars alone which could add at least an annual £2.7 billion to imports and £1.8 billion to exports.”

Skills gap will cause shortage of competent staff 

As well as a possible drop-out from the single market, the automotive industry could also be faced with terrible impact caused by the restrictions on the freedom of movement, that will almost certainly be introduced upon UK’s exit from the EU. The industry currently has 5,000 vacancies that currently can not be filled by local people. For UK advanced manufacturing there is a shortage of qualified scientists, engineers and technologists, hence if the skills gap is not addressed within the UK, the industry cannot but rely on employing people from the EU.

As discussions between the UK and EU continue, we can only anticipate how the future of the UK’s Motoring Industry will shape up in the years to come…