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No-deal Brexit to cost UK auto sector £9bn a year

A no-deal Brexit could cost the UK automobile market some £9bn (€10bn) in annual revenue while making it hard for carmakers to justify having UK plants.

LMC said a no-deal Brexit could make it hard for carmakers to justify UK plants, such as PSA Group with the Opel/Vauxhall plant at Ellesmere Port

So says market intelligence and forecasting specialist LMC Automotive as it highlights that the auto market would bear far greater impacts from a no-deal scenario than the UK economy as a whole.

The firm’s no-deal scenario, run in conjunction with Oxford Economics, indicates that light vehicle sales could fall 10% without a Brexit deal, from the 2.78m forecast for this year to 2.53m in 2020, compared to a smooth transition.

Pete Kelly, LMC Automotive’s managing director, said: “As the UK imports most of its cars, prices would inevitably rise with the further devaluation of the pound after a no-deal Brexit. The very likely imposition of tariffs would only compound the negative effect on demand.”

Production would also be impacted due to supply line disruptions; LMC’s forecast for a no-deal Brexit sees UK light vehicle manufacturing fall from a predicted 1.61m units this year to fewer than 1.4m in 2019 and 1.48m in 2020 – respectively 11% and 7% lower than under a smooth transition.

The LMC research echoes comments made on car production by Tony Walker, SMMT president and managing director, Toyota Motor Europe – London Office, a fortnight ago that “crashing out of the EU would have immediate and devastating impacts, with border chaos disrupting the Just in Time basis on which our business depends. Disruption could last for weeks – even months.”

LMC also said that a no-deal Brexit could see carmakers find it hard to justify the existence of UK production facilities, such as PSA Group with the Opel/Vauxhall Ellesmere Port plant, which is already facing a “difficult time”building on the SMMT research from two weeks ago that found three-quarters of carmakers in the UK say a ‘no-deal’ Brexit would hit their business, impacting on profitability and future investment. Already almost of third of auto firms with UK operations have said they had postponed or cancelled UK investment decisions because of Brexit, with one in five having already lost business as a direct consequence.

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.