Brexit affect on the car industry

The UK referendum has slammed the brakes on almost any stock or shares related to the car industry. The fear is that Britain’s economy could slow and so could Europe’s meaning a negative impact on car sales.

After coming out of one of the worst slumps for car sales in years Europe is giving car makers a fresh round of headaches. The big fear is that Brexit will slam the brakes on manufacturing and car sales. Britain is the second largest car market in Europe with 2.6 million vehicles sold last year alone. However, experts are warning of a double digit percentage drop in UK sales over the next two years. The worry is that Britain’s consumer confidence will drop significantly after Brexit meaning that the British consumer will purchase fewer cars.

This is a major concern for the large car manufacturers outside the UK as Europe has long been a market where they have consistently lost large revenues. In fact it was only last year that Ford finally turned a profit in Europe and this year GM, which has a huge presence in Europe with the Opel and Vauxhall brands, expects to break even in Europe for the first time in seventeen years. This is assuming that other European economies like Germany and France do not slow down as the EU wrestles with life after Brexit.



The good news for the large non-European car manufacturers is that their largest and most lucrative markets are outside of the EU such as the US and China and it’s these markets that continue to remain strong.

So far car manufacturers based in Europe and elsewhere have not made any cuts to production schedules for the second half of this year. However, it’s important to remember that car manufacturers have a history of pulling out of Europe during recession so we could see such movements in the future. At present, we are miles away from being clear exactly how Brexit might play out.