'One in three UK carmakers' cutting jobs over a potential no-deal Brexit

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
Updated
A lorry with car carrier trailer leaves the Honda car plant in Swindon, Britain, February 18, 2019. REUTERS/Eddie Keogh
A lorry leaves the Honda car plant in Swindon, Britain, February 18, 2019. Credit: Reuters/Eddie Keogh

The Society of Motor Manufacturers and Traders (SMMT) in the UK said today that one in three companies in the automotive sector are cutting jobs over concerns about a no-deal Brexit.

With just a few weeks left until Britain is set to exit the European Union, the latest survey from the British car-industry body found that 80% of automotive companies are worried that leaving without a trade deal will damage their future prospects and hammer profits, while over 62% believe that leaving the EU cold, without a deal will hobble their ability either to invest in their UK operations or win foreign business.

“This survey reveals the bleak future that awaits this vital sector in the event of ‘no deal’,” Mike Hawes, SMMT Chief Executive, said in a statement. “Damage has already been done: investment is haemorrhaging, competitiveness being undermined, UK jobs cut and vast sums wasted on the impossibility of preparing for ‘no deal’.”

Hawes said that every day no deal remains a possibility “is another day of lost investment, another day that makes it harder to recover investor confidence in the UK.”

UK car industry warns no-deal Brexit could cost manufacturers £50,000 per minute

Automotive companies, whose complex production systems rely on efficient “last minute” logistics to ensure plants function seamlessly, have been stockpiling for a while now, which is money that could have been spent on R&D.

A separate SMMT survey from X found some of the biggest carmakers in the UK have spent more than £500 million on measures like stockpiling and warehousing, changing shipping routes, and investment in new customs infrastructure, despite there being no actual clarity on how a no-deal Brexit would play out.

VW brand sales and marketing chief Juergen Stackmann told Reuters last week that the group had increased stockpiles of cars in the UK, noting that VW has “optimised inventory levels upwards to delay the impact of potential import tariffs for a while, but there are limits to what can be done."

Overall, three quarters of automotive companies told SMMT that they have already experienced a negative impact on business — gloomy news since this sector accounts for over 14% of the UK’s total exports.

READ MORE: EU automotive leaders warn no-deal Brexit will be 'catastrophic' for car industry