Industry Experts Warn Against Effects of Brexit Despite High Car Manufacturing Rates

Aug 02, 2016 08:19 AM EDT | Jess Christian Ramirez


Industry experts warn against the effect of the Brexit (British exit) or the British electorate vote for UK to leave the European Union despite the record breaking car manufacturing rates in 2016's first half.

In this year's first half alone, 900,000 units have been produced in UK car factories, which corresponds to a 13% net increase from 2015 figures. Society of Motor Manufacturers or SMMT notes that this feat which is the highest since 2000 can be attributed to the increase in investments for new models released this year.

SMMT Chief Executive Mike Hawes pointed however that this growth in the car manufacturing industry leads to an uncertain path due to the effects of UK's exit in the European Union because EU member countries form the largest market of the UK manufactured cars which are exported to foreign countries.

Hawes further stated that the increase in production rates could be a result of investment decision laid in the previous years before the EU referendum was proposed to UK's electorate. Of the many factors which may be affected by the referendum are as follows; tariff-free markets, economic stability and high productivity from skilled workers.

UK's automobile industry stands strong with 169,000 people employed, which includes skilled workers from EU member states. The Brexit vote would mean that the local labor force has to shoulder and meet the labor force which is provided by this figure. SMMT fears that the uncertainty of the status of foreign skilled labourers would affect British car production rates which from last month rose by 10.4%.

A survey of SMMT members which include Nissan, Toyota and Mini were worried of the British market, following the referendum with respect to its foreign relation to EU member states. Aside from this factor, SMMT members worry that British car pricing may also be affected by the fact that 60% of the parts that they use to build cars are imported from other European countries.

Aside from this, new car models from UK fell for the second time last June, which could be a sign that British consumers kept their purses tighter on spending with items following the uncertainties due to the result of the referendum. 

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