According to a statement released by the Society for Motor Manufacturers and Traders (SMMT), the UK car industry has underwent a sharp decline, a trend which is observed to come at a time, when businesses in the sector are known to be spending increasingly for the no-deal Brexit. As a result, the government is liaising with companies in order to help them prepare.
According to reports, submitted by SMMT, the investment fell to £90m in the first six months of the year, starting from a decline of £347m, beginning last year. On the other hand, firms which are known to spend on contingency plans as a result of a possibility of a no-deal Brexit has reached a minimum of £330m.
As sources suggest, the production fell by a fifth in the first half of the year. 666,521 new cars were produced, in comparison to 834,573, during the same period in the year 2018.
The figures were allegedly affected by manufacturers who bought forward their annual shutdowns, as a result the SMMT output fell for 13 consecutive months, which resulted in a sharp decline.
The fall in investment has been quoted as a disturbing trend by Mike Hawes, SMMT chief executive. Furthermore, he mentioned that it could directly affect UK’s exit from the EU, without a deal to protect cross-border trade.
“Over the last seven years the UK automotive industry was a real success story. We were averaging something like £2.5bn per annum”, Hawes commented.
“In the first six months of this year, it’s not been half of that £2.5bn. It’s £90m. It’s been a massive drop off, because we have that fear of no-deal. The fear of no-deal is causing investors to hold back and wait and see what’s going to happen,” he added.
The trend is however not applicable for all investors. In July, Jaguar Land Rover announced to build the first of the new range of hybrid and electric models at a factory in Castle Bromwich. The project will allegedly create thousands of jobs and is to reportedly cost close to £1bn.
However, according to Hawes, the JLR project is an ‘outlier’ and the bigger picture is different, where the investment is mostly stalled.
According to SMMT, UK companies had largely invested in capital preparing contingency plans, preparing for a no deal Brexit, especially when the entire industry was drawing investments in electric and autonomous vehicles.
Eight out of 10 cars manufactured in the UK, are reportedly exported, reducing the number of sales of major markets. Shipments in China fell to 53.1% in the first half of the year, while in the US, it fell to 13%, as a result. Moreover, more than half of the UK’s exports became part of the European Union and the demand fell to 15.6%.