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Will Brexit Effect Our Cars?

How Will Brexit Effect The Car Industry?

The question that no one really has the answer to, what will happen after Brexit? It’s not only the government that will have issues in the event of Brexit, many car manufacturers are waiting with bated breath to see the outcome of the highly difficult and complex negotiations.

Why did Nissan choose Japan over the U.K?

Nissan has officially confirmed that production of the new X-Trail will now commence in Japan, instead of their branch in Sunderland. 

The Sunderland plant opened in 1986 and has been one of the most productive car plants in Europe, producing more cars per worker than any other factory. With current popular models like the Nissan Qashqai and Juke having been built in the U.K, it was assumed that the new X-Trail would have continued this pattern after being given assurances from the government in 2016. 

In a letter to workers, Nissan’s European chairman, Gianluca de Ficchy explained that continued uncertainty with Brexit is not helping the firms plans for the future, he said the company is now planning “to optimise our investments and concentrate on production in Kyushu, instead of adding another production site at Sunderland.”

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So what effect could Brexit really have?

Britain’s automotive sector has been one of the ‘star performers’ of the UK economy in recent years and is seen as having benefited from EU membership. However, with current uncertainty regarding Brexit negotiations, we have already witnessed the negative impact it is having on the motor industry. Carmakers are struggling to address challenges caused by decreasing diesel sales in Europe after the Volkswagen emissions scandal. According to figures released in January by the Society of Motor Manufacturers and Traders (SMNT) British car sales fell for a second successive year in 2018 by almost 7% due to consumer confidence being dented by Brexit. Jaguar Land Rover (JLR) has announced that they will lose 4,500 jobs globally within their workforce including at least 2000 in the U.K. This news came as shock to the British public as JLR is the largest carmaker in the country and they have started a voluntary redundancy programmes for those effected. 

Nissan have confirmed that despite the new X-Trail being built in Japan, “no jobs will be lost” and have reiterated the continued faith in the U.K’s manufacturing abilities with the current Qashqai, Leaf and Juke models still being produced at the plant in Sunderland. Not all people are convinced at Nissan’s reasoning for their decision and believe that many other mitigating factors are to blame for the lack of faith in manufacturers U.K base. Controversial Conservative Brexiteer Jacob Rees-Mogg said Nissan had "all sorts of problems that are nothing to do with Brexit", including "very considerable corporate governance problems" arising from ex-chairman Carlos Ghosn's arrest in November. 

Employment is not the only issue which could potentially be affected by the outcome of Brexit on March 29th, many manufacturing components of a U.K built car will have crossed the Channel several times. They begin in the basic stage in one country and will end up being built into an even bigger component when transferred elsewhere, ending with being exported as part of a complete car. If the government decide to come out of the EU with a no trade deal, it could increase the tariff on components by 4 or 5% with each crossing at the channel and an ultimate increase of 10% on a complete car. 

With the uncertainty surrounding Brexit, it can be safe to say that the motor industry along with many other U.K sectors will be affected in one way or another, but the extent of which can only be speculated. What we do know is that March 29th will be a landmark day in British history, for better or for worse.

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1st of April 2019