Daily Management Review

Toughest Challenge Since 1970s Stare At British Auto Industry


The biggest challenge starts at the face of the British since the 1970s.
In the first half of the year, the production of auto in the UK has fallen by about a fifth while there has been a 70 per cent drop in investments because of siphoning of funds to prepare for Brexit contingency plans form the technology development expenditure for electric and hybrid cars to meet the impending emission norms and regulations. 
The British auto industry, that employs about 168,000 people, is already facing the troubles of a slowdown in global economy and a drop in auto demands. That is compounded by the impending exit of the UK from the European Union which has resulted in a drop in production and loss of money.
It was just days ago that the CEO of the UK Society of Motor Manufacturers and Traders warned that the British car industry would be doomed if the UK leaves the EU without a deal on October 31.
"A no-deal Brexit presents an existential threat to our industry," Mike Hawes wrote in a letter to the new British prime minister. "We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production."
According to SMMT, efforts to mitigate the risks from a disorderly Brexit has already forced the British auto industry to spend £300 million or $365 million. That is over thrice the investment in the industry made in the first six months of the year. The average total annual investment in the British auto industry has been about £2.7 billion or $3.3 billion.
"Today's figures are the result of global instability compounded by ongoing fear of 'no deal'," Hawes said in a statement. "This fear is causing investment to stall, as hundreds of millions of pounds are diverted ... money that would be better spent tackling technological and environmental challenges."
A drop in demand in some of the crucial markets for the British auto industry as well as
There has been a decline in output for 13 consecutive months because of temporary factory closures ahead of Brexit has forced a decline in the production of the British auto industry for 13 consecutive months.
Analysts however say those figures would be dwarfed in case of no deal Brexit which would mean the end of tariff-free trade with Europe which accounts for about 57 per cent of the total exports of British cars. It would also completely upend the supply chains that follow the just-in-time production strategy, thereby disrupting production and resulting in further reduction of profits that are already plummeting.
The British auto industry could have to incur additional expenditure of about £4.5 billion or $5.5 billion a year because of new tariffs from a no deal Brexit, according to SMMT. The body estimated that the industry would lose £50,000 or $63,300 a minute.
"We need a deal with the European Union that secures frictionless and tariff free trade," Hawes wrote in his letter to the prime minister. "No-deal Brexit is simply not an option."


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