The business climate in the United Kingdom is going through an unprecedented fear psychosis as the anxiety related to Brexit looms large over the horizon. One of the worst hit UK industries is the car industry that has seen shrinking investments, and by extension, the production of cars has also plunged significantly. The Society of Motor Manufacturers and Traders (SMMT) has revealed that the quantum of investment in the industry shrank by a jaw-dropping 46.5% in 2018. In 2017, the car industry attracted total investments worth £1.1 billion but in 2018 that plunged to £588.6 million.
According to the head of SMMT, Mike Hawes, Brexit has caused enormous damage to the industry. He went on to add, that the current predicament “is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely. With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert.”
The dark warnings about the future are not only restricted to the car industry in the UK. Manufacturing Northern Ireland chief executive Stephen Kelly stated that many firms are ‘in despair’ about the current Brexit-related issues that are plaguing British industries. Talking about the recent trends in the car industry in the UK, Simon Jack, the business editor of the BBC stated that although the reasons behind the fall in investment could be manifold, he conceded that the recent plunge is alarming. He said, “Investment in the car industry comes in uneven lumps as old models are retired and new ones introduced over time. But even allowing for that, the plunge in new investment revealed this morning is stark.”
The shrinkage in investment has naturally had a significance in the overall production of cars in the UK as well. Total production slumped by 9.1% as only 1.52 million vehicles were produced. Consequently, exports fell by as much as 7.3% while those meant for domestic consumption nosedived by 16.3%. The only positive for the car industry was the exports to the United States rose by as much as 5.3%, but SMMT head Mike Hawes had a note of caution regarding that figure as well. He stated that if the UK decided to increase tariffs for exports to the US in a post-Brexit world, then those numbers would not hold.