Image via Flickr by Tyler Merbler

Image via Flickr by Tyler Merbler

With British voters electing to remove the United Kingdom from the European Union, the British pound is worth the least amount that it has been in decades. One of the biggest questions throughout has been how is this going to affect the automotive industry. Britain ships 58 percent of its autos to European Union nations, which means Brexit will dramatically affect the auto industry. Many are debating whether this could ultimately be the cause of Britain’s economic demise. Others think that this could be the end of the European Union as well.

Auto Sales at Risk?

For 2016, auto sales were to have a record-setting year and beat last year’s record of 17.5 million vehicles. Since the Brexit hit in June, it is now being predicted that sales are expecting a 1-percent drop, decreasing the total number of sales by half a million. The Brexit has many investors pulling out of the market completely until everything settles down and the market becomes more stable. The automakers affected the most by this will be Ford and General Motors, which have already been forecast to expect the biggest losses.

Fuel Cost

The effect the Brexit will have on fuel pricing is still unknown. However, immediately after the Referendum, the value of the pound fell by more than 10 percent. The British pound losing value will cause fuel prices to go up over the next few months; no one knows how much at this point. RAC Motoring Services believes people are reacting more out of fear than actual fact, and that if the price does go up, it won’t be nearly as much as people are expecting.

Vehicle Pricing

In the United Kingdom sales are healthy, but that could change with the Brexit. The restriction on obtaining more materials and components will cause prices to rise. These restrictions on materials will lead to the overall cost of vehicles in British manufacturing to increase as well. New vehicles, especially those coming from Europe, will increase in cost as well due to the new trade tariffs. The United Kingdom imports around 2.2 million out of the 2.6 million cars they sell, but the Brexit brings new exchange rates that will cause the prices to increase.

Issues in Production

Due to the profits of auto companies possibly dropping, some of these companies might remove the manufacturing aspect out of the United Kingdom. This will increase production and sales for companies that produce and sell cars within the United Kingdom or export to the European Union. Nissan alone builds 475,000 cars in the United Kingdom, but most autos ship overseas.

The future of the auto market after the Brexit is completely unknown. No one had predicted for this, and now everyone is scrambling to figure out what will happen next. New vehicle purchases in the United Kingdom will become more expensive, but it seems that most are expecting the price of cars that are actually manufactured in the country to become less expensive.

How Brexit Will Affect the Auto Industry

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