U.K. Auto Industry Already Feeling the Brexit Pinch
LONDON — Investment in Britain’s auto industry plummeted last year as the country’s departure from the European Union drew nearer without agreement over the terms of leaving the bloc, figures released on Thursday show.
Investment in 2018 dropped 46.5 percent from the year before, according to data from the Society of Motor Manufacturers and Traders, a British trade association.
With the Brexit debate in London and Brussels mired in disagreement and recriminations, concerns and warnings from businesses have grown louder. Uncertainty is usually bad for trade, and companies have repeatedly urged political leaders to provide clarity about the withdrawal and its likely effects on commerce.
But those pleas have generally gone unanswered, and many multinational companies have said they are ready to move operations outside Britain.
In its report on Thursday, the Society of Motor Manufacturers urged British lawmakers to do whatever was necessary to prevent the country from leaving the bloc without an agreement with the European Union, a so-called no-deal Brexit. In addition to the data on the drop in investment, the organization published figures that showed production had fallen to its lowest level in five years.
“With fewer than 60 days before we leave the E.U., and the risk of crashing out without a deal looking increasingly real, U.K. automotive is on red alert,” Mike Hawes, the organization’s chief executive, said in a statement. “Brexit uncertainty has already done enormous damage to output, investment and jobs.”
“Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal,’” he added.
Negative effects on the British auto industry, which directly employs about 186,000 people, appear to have already started.
Regulatory changes, uncertainty, and declining confidence among businesses and consumers hampered production for sales within Britain, the organization said. Manufacturing of vehicles for export, which represent more than 80 percent of output, dropped 7.3 percent in 2018, it added.
Demand from China fell by almost a quarter, the figures showed, while demand from the European Union sank almost 10 percent as a global slowdown started to bite.
Automakers like Jaguar Land Rover and BMW have already said that they would briefly pause production after Britain’s scheduled leaving date at the end of March, to assess and cope with any disruptions that come with life outside the European Union.
The chief executive of the luxury carmaker Bentley, Adrian Hallmark, has called Brexit a “killer” for his turnaround plans.
And London Electric Vehicle Company, which makes black cabs and is owned by Geely of China, said on Thursday that it would cut 70 position among its agency staff in response to the uncertainty.
Manufacturers in Britain have taken advantage of freedom of movement among European Union members to create just-in-time manufacturing processes that allow components to be delivered minutes before they are needed. That has allowed companies to use expertise and plants in different locations and reduced the need for storage.
But many manufacturers are now choosing to stockpile parts as the Brexit deadline draws nearer without confirmation that they will have the same trade advantages as before.
An exercise in traffic management this month near the port of Dover, in southern England, prompted ridicule and did little to reassure businesses that they would be able to continue bringing goods into Britain without major delays.
The damage already done to the car sector, Mr. Hawes said, would be “nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the E.U. but with the many other global markets with which we currently trade freely.”