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How A No-Deal Brexit Would Impact the Automotive Industry

  • by: James Plant
  • On: 1, Oct 2018
2 min read

With the future of Brexit still uncertain at the time of writing, many are wondering what a no-deal Brexit would mean for some of our key industries. The Motoring and Automotive industry is one of the most integral to the UK’s economy, with 856,000 employed, generating £82 billion annually.

A no-deal Brexit scenario could potentially result in a £5 billion tariff for the UK Automotive industry. The Automotive sector is Europe’s largest in terms of R&D, not surprising considering it generates 6.8% of the EU’s GDP. The UK is large contributor– we bought 1.9 million cars from the EU in 2017.

How A No-Deal Brexit Would Impact the Automotive Industry

  • Brexit May Slow Down the Assembly Process:

The problem with not getting a favourable deal lies in how UK cars are constructed. The average car has around 30,000 parts, many thousands of which are imported in from other countries, and the final product is assembled in a UK factory. If the delivery of those parts is made more complicated, it can slow the entire process down, resulting in delays, which cost money. If just one part doesn’t arrive at the factory, the car cannot be made.

More expensive delivery of parts would also negatively impact costs. Tariffs would be imposed at every stage of production, massively increasing the overall cost of the vehicle when it finally came to consumer purchase. Large sections of the public simply won’t be able to afford new cars, meaning a reduction in demand and overall sales.

  • Heightened Costs:

The UK exports £3.4 billion worth of motoring components into Europe and imports roughly three times that much back into the country. If this supply chain were disrupted, the results could be catastrophic. As always, uncertainty is an issue purely because the variables are always changing, so no plan can be fully actualized.

What a No-Deal Brexit Could Mean for Automotive Jobs:

If a no-deal Brexit were to go ahead, potentially thousands of jobs would be lost as car manufacturers scramble to cover their losses. Contingency plans are already being put into place to try and safeguard profits, with widespread downsizing, reduced investment in the UK market and moving factories elsewhere. A no-deal Brexit could relocation or job losses for high volumes of Automotive engineers and technicians in the UK.

How You Can Protect Yourself:

VHR works closely with key players in the Automotive sector to ensure quality workforces, strong contracts and dependable work in an unpredictable world. Work with a specialist Automotive recruitment consultant who understands your business and the skills you need for growth and success.

With client and candidate networks across 45 countries, VHR’s Automotive team are continually matching skilled engineers and technicians with the best engineering jobs.

Check out some of VHR’s Automotive jobs or read more about how the Automotive industry is rapidly changing.

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