The prospect of no-deal may have been pushed back until 31 October, but the UK auto industry is already facing serious trouble with investment down 80% over the last three years.
In a whitepaper entitled ‘Death by a thousand cuts‘, Matthias Holweg, automotive expert and Professor of Operations Management at Saïd Business School, University of Oxford, warns that the UK auto industry could collapse by 44% by the mid-2020s in a no-deal or “WTO” Brexit scenario.
Holweg warns of a slow death to the industry, where “the great and present danger is that the decisions on where to produce new models will continue to go against the UK, until existing plants here become sub-scale and thus uncompetitive, and will close.” He continues: “This would invariably lead to a hollowing-out of the UK’s component supply chain, effectively condemning the automotive industry to a slow ‘death by a thousand cuts’…Whichever way one looks, it is hard to underestimate the threat Brexit represents to the future of UK manufacturing.”
The study comes after a number of global car manufacturers announced UK car plant closures and job cuts in the wake of the Brexit vote and future uncertainty. And a no-deal Brexit would be the worst of all scenarios for the industry, with Jaguar Land Rover, Ford, Toyota, Nissan and BMW all issuing statements on the negative impact of a such a situation.
If the auto industry shrinks by as much as Holweg predicts, this will also have knock-on effects across other industries, as parts manufacturers and suppliers are also hit. Jake Smith, owner of DVLA private number plate supplier Absolutereg.co.uk commented: “Not only will this affect manufacturers, but the wider industry may suffer – including the car accessories market.”
This stark warning should not come as a surprise to politicians that have seen report after report that show a hard Brexit will cause significant damage across British industry, where any new frictions in trade between the UK and EU will start to make UK firms less competitive. Job losses have already hit the automotive industry, and a no-deal scenario would make the situation significantly worse.
The report comes as the UK prepares to fight the 2019 European Elections, where Nigel Farage’s new Brexit Party leads the polls with a policy to push for a damaging no-deal Brexit, according to a recent survey by YouGov. The rise of Farage’s UKIP-replacement has pushed the Conservative Party into third place, with a number of commentators arguing that the Tories could sink as low as single figures in response to their handling of Brexit to date.