As per market analysis, the automotive sector in UK is likely to lose around £55 billion in terms of manufacturing value within five years in an event of a no-deal Brexit.
The automotive sector has endured a tough year, as the COVID-19 pandemic has compelled the temporary closure of each manufacturing factory across Europe and decreased the demand for brand new cars. Simultaneously, car corporations across Europe last year spent nearly £54 billion on novel electric car technologies to meet tightening CO2 emissions guidelines.
Trade negotiations between EU and the UK have not yet reached a decision with almost one month more to go till the end of the Brexit transition timeline on 31st December 2020.
Industry officials have cautioned that a no-deal Brexit would risk the future of UK plants. In fact, PSA Group has stated that the firm would only be building its novel Vauxhall Astra in the UK if there is a trade agreement. Whereas Nissan stated that business at its Sunderland plant, known to be the biggest car factory across the UK, would be severely damaged.
All large UK-based car manufacturers have international owners. The presence of a well-established Japanese and other renowned European carmakers within the UK was entirely based on easy entry to Europe’s single market, which means that the industry sees any possible limitations to trade as highly damaging. The Society of Motor Manufacturers and Traders study, conducted by Auto Analysis consultancy, discovered that even a “bare bones” trade agreement might cost the market approximately £14.1 billion.
George Gillespie, the president of SMMT and the executive chairman of Horiba Mira, a renowned Japanese-owned cart testing firm, stated that the firm has already spent nearly £1 billion in preparing for the unknowns of Brexit and has almost lost 28 times that amount to COVID-19.
Gillespie further added that a good trading relationship that would work best for automotive would be needed for the coming years.