Britain’s automakers and traders are starting to feel the strains of Brexit and output this year is likely fall short of the industry’s expectations.
The British government needs to say now what its plans are for the sector when the country quits the European Union in 2019. The number of cars made in Britain in June fell by almost 14% year-on-year to 136,901, the SMMT said on Thursday. That left first-half output in a sector down nearly 3% at 866,656 units.
Although that represented the second-highest January-June performance in 12 years and production is likely to rise later in the year, output in 2017 would probably be closer to 1.8 million units than a previous forecast of 1.9 million.
Britain’s car industry has boomed in recent years with manufacturers such as Nissan, Toyota and Honda investing heavily in the country as a base for selling to the rest of the EU and beyond. More than half of the cars exported from Britain go to the EU.
But last year’s decision by voters to leave the bloc has left the industry exposed. The EU has tariffs of 10% on car imports, posing a risk if Britain leaves in under two years’ time with no new trade deal in place.
The impact of the referendum on the country’s consumers is another problem for carmakers. Households have been pinched by a sharp rise in inflation, caused in large part by the fall in the value of the pound since the Brexit vote.
