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The outlook for the UK automotive industry beyond Brexit
A white paper released today by Matthias Holweg, automotive expert and Professor of Operations Management at Saïd Business School, University of Oxford details the damage that has been wrought on the UK’s car industry by the Brexit process.
It finds that the industry has already lost 9% of its volume due to Brexit, and overall investment has dropped by 80% over the last three years. In the event of a ‘No Deal’ Brexit, in which the UK would leave the European Union without any trade deal agreed, Professor Holweg estimates that the UK would lose a further 35% of its current production volume over the following decade.
Advocates for a customs union ‘compromise’ should think twice: according to Holweg, volume car production cannot be sustained under a WTO tariff regime, and a customs union would make UK plants less competitive. The resulting damage to skill and supply bases could also have further adverse effects on aerospace and defence manufacturing.
'The great and present danger is that the decisions on where to produce new models will continue to go against the UK, until existing plants here become sub-scale and thus uncompetitive, and will close,’ states Holweg. ‘This would invariably lead to a hollowing-out of the UK’s component supply chain, effectively condemning the automotive industry to a slow “death by a thousand cuts” … Whichever way one looks, it is hard to underestimate the threat Brexit represents to the future of UK manufacturing.'
Matthias Holweg is the American Standard Companies Professor of Operations Management at Saïd Business School, University of Oxford. He has conducted extensive research into the competitiveness and dynamics of the global automotive industry and was part of the UK’s New Automotive Innovation and Growth Team that proposed the establishment of the Automotive Council UK in 2009, which he has been supporting ever since.
Read Death by a thousand cuts: The strategic outlook for the UK automotive industry beyond Brexit