As I very much expected, cooler heads started to bubble to the top after last week’s shock ‘Brexit’ vote by over half of the citizenry of this United Kingdom to reign in excessive control of our country by unelected Europeans – minor details like capping immigration to sustainable levels, letting our judges make court rulings that can’t be overruled in Brussels, fish what we want out of our own seas, that sort of thing. Despite the doomsayers, the sun still rose and set, the country continued to make components and cars and the ‘summer’ continued to be rubbish. Meanwhile, the FTSE recovered what it lost, if not the pound, Obama’s threat to put us in the back of a queue for a US trade deal was largely quietly countermanded by officials with more sense and even certain EU voices were heard to utter that access to the single market (which the auto industry wants, of course) might even be possible with concessions on immigration and other matters that led to the majority Brexit vote.
Last week, our resident economist, Dave Leggett, took you through his usual measured analysis of The Situation and Tata’s Jaguar Land Rover said ‘business as usual’. This week, the pro-Remain SMMT called for tariff-free trade deals with both the EU and other markets, as did the German equivalent, the VDA. Bearing in mind that the UK imports around 80% of its cars and a lot of European components, any eventual (over)reaction, like whacking on tariffs or any other barrier are going to hurt European firms more than ours so there’s an incentive with which to start talks once Britain sorts out who’s going to be the next prime minister and becomes the first country to invoke the Article 50 exit clause. Some ossified EU officials have suggested we won’t get a ‘Norway’ type access-all-areas deal without the clearly-majority-voter-unwanted unlimited EU immigration (free movement of people) clause as well but, already, there have been encouraging signs that the UK could agree its own specific deal. All this is at least two years away from the Big Break and there will be lots of talkfests before anything is finally set in stone. Meanwhile, many countries outside Fortress EU have indicated willingness to agree trade deals. The VDA’s call was also echoed by Scandanavian supplier group FKG while the European group CLEPA announced it was, in common with many others, “shocked” by the Brexit vote and also in favour of no tariffs. A US group is also concerned, in their case with consequences of the fall in the value of the pound. KPMG also chimed in with thoughts of slightly lower sales (consumer confidence hit) but higher UK production (lower pound makes our exports more competitive).
Go deeper with GlobalData
Brexit was also on the agenda at conferences we attended in London this week. Business minister Sajid Javid made the point some panicking observers initially seem to have overlooked: “I want the UK to remain a leading destination for international investment in manufacturing. Last Thursday saw a vote to take more control over immigration, not a vote to put up a closed sign. The UK is open for business.” Again, tariff-free access to global markets, not just the EU, is on his wishlist for future Brexit negotiations. Meanwhile, Johan van Zyl, president and CEO of Toyota Motor Europe, has told reporters that his company respects the decision of the British people in its recent EU referendum and that the company will “study how we are going to ensure we have a sustainable business in the UK”. He stressed the need for stability but also suggested that the long-term picture and UK manufacturing footprint for Toyota will depend on the trade deal negotiated between the UK and EU. It’s worth noting the UK plant has struggled since way before Brexit – it rationalised two lines into one following the 2007/8 credit crisis – and that recent big investments, since the UK plant’s early 1990s opening, have been across the channel – a Yaris plant in France, engine and gearbox plants in Poland and another car assembly plant in Turkey.
Other things happened as well, this week. There was an extraordinary recommendation from NHTSA that old Hondas in the US be repaired right now due to the increased likelihood of Takata airbag inflator disintegration. Volkswagen, pending a bit of official box ticking looks to have agreed an emissions test-rigging mea culpa deal with the US, with some approval, but that has resulted in mutterings in other countries such as Germany and Korea, about similar deals being offered to owners there. We also had news of red ink at Aston Martin and took a look at future Ford model plans.
Like JLR said, business as usual.
See Also:
Have a nice weekend.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataGraeme Roberts, Deputy Editor, just-auto.com
