Brexit: The ongoing struggles of the automotive industry

14/09/2023

MORE than three years on from Brexit, the ramifications are still being felt by companies up and down the country. The automotive industry continues to get to grips with challenges surrounding supply chains, imports, exports and increased costs. What was promised to be a transformative deal for the British economy has resulted in ongoing struggles for this industry and others alike.

Supply chain disruptions

Brexit has undoubtedly disrupted the flow of goods and components in and out of the UK, with increased costs ultimately being passed down to customers. Issues surrounding semiconductor shortages have only exacerbated the issue, causing a spike in prices for new and used cars in the past couple of years.

With the added complexity of dealing with UK businesses and manufacturers, many international companies are steering away from partnerships with Britain in favour of better deals in mainland Europe and Asia. It’s a pivotal time for British manufacturing in the global automotive sector.

Export challenges

The process of exporting cars and automotive components to other markets continues to be more of a headache than it once was before the referendum. Congestion at border crossings, particularly from ports like Dover, means that logistical challenges are rife. It’s not out of the question for car manufacturers to consider vehicle air freight as a more reliable method of shipping.

A range of industries, including automotive, have seen additional red tape and costs for exports dramatically reducing the level of trade with the EU. For example, British meat and fish exports have reportedly dropped to half of pre-Brexit levels. British cars are facing a similar threat with the point we consider next.

Tariffs and increased costs 

Costs on either side of the Brexit agreement have become inflated with tariffs imposed on imports and exports. It’s far worse for the UK, with cars being one of the main exports to the EU, the added costs of tariffs and regulatory costs mean that British companies are losing their competitive edge in key markets.

The situation 3 years on

The complications caused by Brexit and other surrounding factors are showing signs of easing, which is great news for all involved in the auto industry. For British car manufacturing, the trend is heading in the right direction with a nearly 10% rise YoY in the number of cars made in the UK.

Despite the red tape surrounding Brexit, the EU continues to be the leading market for British car exports, with more than half going to Europe. These are signs that perhaps the industry is starting to find its feet again after so much tumult.

But it’s not all promising news. Industry leaders are still calling for renegotiated Brexit terms and a clear strategy from the government over fears of a mass loss of jobs in the auto industry. As the shift towards electrification continues, countries in the EU and elsewhere are competing to be key links in the supply chain. The UK’s position in this production race hangs in the balance.  

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