The so-called “hard Brexit” scenario will have disastrous consequences for the British car industry, according to a study by Deloitte.
The radical version of Brexit will take the UK back ten years, at the height of the financial crisis. This is the conclusion drawn by the Deloitte study, published on February 8, 2018. In its investigation, the firm assessed the impact of the exit of the European Union on the automotive industry and it appears that the losses will be abysmal , from 2019.
In this worst-case scenario, Deloitte estimates that the market will fall to 2.28 million registrations in 2019, compared with 2.19 million units in 2009. In comparison, IHS Automotive expects a total of 2.83 million put in the road, in case of maintenance of the United Kingdom in the economic zone, in 2019. Certainly, the local productions will be advantaged by progressing of 17% (+ 60 000 units), but France will lose 83 000 exports (-36 %, to 144,000 units) and the Germans not less than 255,000 units (- 31%, to 555,000 units). The rest of Europe will fall by 312,000 units (-36%, to 556,000 units), in favor of productions from the rest of the world (+ 40,000 units, or + 7%, to 610,000 units).
Translated into hard and fast coins, these setbacks amounted to 12.4 billion euros of turnover. For Germany this corresponds to a net loss of 6.7 billion euros, to 15.1 billion euros. France will then make 36% of turnover to 3 billion euros, according to Deloitte. The United Kingdom will gain 17% to 11.6 billion euros. The “hard Brexit” will cost 900 million euros, in the profit column, which will rise in 2019, to 3.7 billion.
1,800 French jobs in the hot seat
In the opinion of Deloitte’s experts, this will result in a mechanism of price increases. In the case of a firm Brexit, a vehicle sold in the United Kingdom will cost an average of 15% more, if higher production costs and import taxes are passed on to the consumer. It will thus be necessary to count 3700 euros more in the concessions (to 27 600 euros). A French production will take on average 4,300 euros (25,100 euros), while a vehicle from Germany will climb 5,600 euros (to 32,100 euros). If the vehicles coming from the rest of the world will limit the impact, with 2,300 euros of increase (to 25,500 euros), those coming from Europe will acknowledge 4,300 euros of increase (to 27,900 euros). Even local productions will suffer an inflation of 800 euros (27 700 euros).
The Deloitte study is worrying on our side of the Channel. In France, 5,000 people participate in the trade of vehicles for the UK market, including 3,400 on the production lines. Potentially, the consequences of a Brexit are then the suppression of 1,800 jobs in our territory.