Brexit: the effects on automotive industry

Since June 23rd brexit has become an international phenomenon and many have raised questions about the outcome of this event. What does this mean for motorist? And what is car making companies’ action towards Brexit as many of them join the industry solely because of the benefits from the EU?

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A view from Jaguar Land Rover

Jaguar Land Rover’s analyst states that the company’s earning profit was on an increase before Brexit and it will not stop rising, now that the pound stays depressed. For instance, Toyota’s North America profit went almost double when USD: JPY exchange rate changed from 83 to 110. This indicates the effect of inferior currency on OEM earnings. A Bernstein Research’s analyst expects that JLR profit would grow even stronger than it is predicted at this low pound exchange rate.

Car buyers should go look for finance deals

Christopher Floyd, director of Parkers car finance stated that the impact Brexit had on England would fully depend on the network the UK established. He also gave a suggestion to invest on a car finance deal if your budget is constant. There are plenty of zero-percent APR options on the market, and they are expected to go up as car companies are changing their finance framework.

Mercedes-Benz stayed calm in the storm.

England is the largest market of exporting for German Automotive industry. German’s automakers are desperately calling for a tariff free trade among the countries because half of UK’s annual sale of new cars is created by companies owed by the German and in 2015 more than a half of the auto created in Britain were exported to the EU. Germany has as many as one hundred production websites in the UK including suppliers.

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Volkswagen Group’s spokesperson announce that it is so early that it cannot predict the influence of Brexit on its Bentley (UK based) brand. The sale of England – Volkswagen’s the second in the biggest European market – is too cannot be predicted.

Dieter Zetsche, Daimler CEO suspects that the makers of Mercedes-Benz will not be affected. “This isn’t a nice time for EU as well as in my opinion, surely not for Britain.

A new future for UK car makers

As Britain is no longer a part of the EU, it is the government’s job to ensure the automotive interest with the EU. They must always seek for tariff-free deals in the European and keep attracting talent from the EU to secure the UK’s place in the global competitive market.

Not just the EU, Korea is also involved

A 10 percent tariff on exporting passenger vehicles to the UK is South Korea’s auto association biggest concern right now. They said it is high time to make another deal similar to the EU-Korea trade pact or else things will get worse.

Hyundai is very carefully observing the situation. Should there be any impact on the global economy or the financial markets, they will “respond accordingly”. In this situation, Brexit could cut the car maker’s earning by almost 9 billion dollars, so investors ought to prepare for anything. Literally is anything.

Surprisingly, Nissan turned down all questions and raised comments on this occasion.

The cut on exporting to Britain’s consumer

The Freight operators and lorry drivers are the most vulnerable victims of this case. When the UK is not a part of the EU, it is still UK’s biggest export market AND supplier of out imports. Therefore, the government cannot let these become a burden to the flow of exporting and importing goods in and out of Britain. Two years remaining for the government to secure the laws imposed on the non-EU member states, for instance goods and service flows to Albania and Serbia are not imposed.

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Car finance deal and the law

This is on the top of our concerns because most financial regulation which is applicable in the UK derives from EU legislation. If the government takes no action, this regulation will remain unchanged. Companies must now deal with the old UK law and start planning for implementations for legislation that is going to take effect in the future. One thing to be sure, consumers’ rights and protection are unchanged, should the government and parliament does not change the applicable legislation.

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