- What is the main reason for the crisis in the UK automotive industry?
- What is the impact of Brexit on the UK automotive industry growth?
- Why were prominent automobile factories closed in the UK?
On the one hand, the UK automotive industry is going through an inflammatory period due to the government’s strict rules to deal with air pollution. On the other hand, the market’s instability was caused by the deadlock of the UK’s exit from the EU. So far, several foreign self-build companies have closed their factories. Thus, the UK automotive industry growth reached its lowest level in the last 65 years.
UK’s commitment to end the life of gasoline cars
About the UK automotive industry growth, the only sector in which car production has been increasing is the electric car sector, which has increased by more than 30% compared to the previous year. The production of cars with clean fuel in this country was about 44 thousand last year. It should be noted that the UK is one of the countries that has pledged to end the production of gasoline cars in its country by the end of 2030, and it is likely that by 2050, more gasoline cars will be banned in this country.
Lack of parts is one of the reasons for the car production crisis.
The amount of car production in the UK reached 64 thousand 729 vehicles with a strange decrease of 41% compared to the same period of the previous year, which is the lowest amount of car production in this country since 1956. Among the main reasons for the sharp decline in the UK, UK Government can mention automotive industry growth problems such as the lack of parts and the permanent closure of the Honda factory in Swindon.
The attractiveness of the UK automotive market to the EU
Before the Brexit referendum in 2016, prominent figures in favour of the UK’s exit from the EU claimed that an agreement with the EU was inevitable, citing the support of the car manufacturing giants in the country. David Davis, the former secretary of Brexit, said that the British market has many attractions for the EU.
Before the referendum, he said that within a few minutes after the people voted to leave the EU, the heads of Benz companies, BMW, Volkswagen and Audi would ask German Chancellor Angela Merkel to remove barriers to trade with the UK.
Destructive consequences of Brexit on the automotive industry
The unknown and uncertain fate of the UK’s exit from the EU, known as Brexit, has had harmful and destructive effects on various issues, including the UK automotive industry growth. As analysts and experts in the automotive industry had estimated, many foreign companies operating in This country will live under the influence of Brexit so as not to be caught in the buts and ifs after that, as well as the negative consequences of Brexit.
Closure of car factories after Brexit
For several months, the production statistics of the UK automotive industry growth have been going down for several months. Several car factories in the UK, including Honda and Jaguar Land Rover, closed their factories in the past months to overcome the Brexit crisis. BMW and Toyota also suspended the operation of their factories in the UK. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, has warned that factory closures and continued uncertainty over the future of Brexit will cause irreparable damage to the UK automotive industry growth.
Ford factory suspension in South Wales
Ford is the latest British car multinational to close one of its factories in South Wales. This factory was opened 40 years ago, and 700 people are working there. Ford officials say production numbers for vehicles with internal combustion engines have fallen sharply due to stricter government regulations. The UK government has recently introduced new laws to reduce emissions from old cars, especially diesel ones, and encourage people to buy electric cars. Ford announced it would cut 550 UK jobs as part of an international layoff plan.
Heavy customs duties for car manufacturers after Brexit
The UK automotive industry is one of the leading opponents of the country’s exit from the EU. A significant part of the automotive industry’s activity depends on the process known as “just-in-time manufacturing,” according to which auto spare parts are distributed between manufacturing companies and factories when needed. Foreign car manufacturing companies are worried that with the UK leaving the EU, they will be unable to import the necessary spare parts without paying heavy customs duties. This is a factor that significantly impacts the UK automotive industry’s growth.
However, the official statistics published in the past months indicate a decline in the UK automotive industry growth. The Society of Motor Manufacturers and Traders (SMMT) announced by posting a report that the car production figures in June have decreased compared to last year, So car production in June dropped by 24.3%. Brexit had a lot of adverse effects on the UK automotive industry growth. In addition to the severe shortage of parts to build cars, many foreign car companies left the UK after Brexit, doubling the problems of the UK car industry.