Aftermath

Brexit aftermath

The impact of Brexit on the UK Light Vehicle industry

Arthur Maher, Research Director

31 May 2018

impact of Brexit on the Light Vehicle market

The impact of Brexit on the UK Light Vehicle industry

In the still-uncertain aftermath of the UK referendum vote to leave the EU, successfully predicting the end state for the UK, with respect to its relationship with the rest of the bloc, remains impossible. For Light Vehicle producers in the UK, risks are therefore significant. Clarity will eventually manifest, but such is the conflicted state of the political landscape in the UK that this is unlikely to happen soon.

LMC Automotive’s European trade analysis shows that UK dependency on the EU remains high, with a little under half of all UK Light Vehicle production this year being exported to other EU markets. On the other side of the equation, EU countries will export around 1.8 million Light Vehicles to the UK this year.

Any new barriers to trade resulting from Brexit would, of course, be problematic, but the issue goes far beyond any obstacles to shipping fully built vehicles. The interconnected supply chains that have been established between the UK and the rest of the EU are also at risk. New barriers to these complex activities have the potential, over the longer term, to threaten the viability of some UK vehicle manufacturing.

CHART 1: UK LV EXPORTS TO EU MARKETS, 2018

Impact of Brexit on the Light Vehicle Market

For manufacturers in the UK, exposure to these risks is mixed. As shown in Chart 1, Nissan’s Sunderland plant is the most exposed, with the Qashqai accounting for 60% of the total.

If we consider export volumes from Toyota’s Burnaston and Honda’s Swindon plants, as shown in Chart 2, it becomes evident that Japanese OEMs in particular are heavily reliant on trade with the EU. It is little wonder then that Japanese officials have been vocal in their concerns over the impact of Brexit.

CHART 2: UK LV EXPORTS TO EU MARKETS, BY OEM GROUP

Impact of Brexit on Light Vehicle market