Post-Brexit U.K. Car Sales Slump Seen Risking 18,000 German Jobs

Thrugelmir

Confirmation of the widely held view.

Rising prices in the U.K. due to a hard Brexit would put 18,000 German auto industry jobs at risk, according to a study, highlighting the wider implications such a move by British Prime Minister Theresa May could pose for the entire region’s economy.

The Deloitte consultancy study released Thursday predicts U.K. car prices could rise as much as 5,600 euros ($6,253) per vehicle should the country leave the European Union’s single market and customs union. Sales in the region’s second-biggest auto market may slump 20 percent in 2019, the year the U.K. is set to leave the EU, wiping out 12.4 billion euros in revenue for automakers, Deloitte predicted.

The sector “needs to come up with countermeasures like intelligent and flexible pricing strategies,” said Thomas Schiller, who heads Deloitte’s automotive team. “Some carmakers as well as suppliers are considering a move of production facilities elsewhere, as well as improving their supply chains.”

https://www.bloomberg.com/news/articles/2017-06-22/post-brexit-u-k-car-sales-slump-seen-risking-18-000-german-jobs

A_Medium_Size_Jock

I posted about this a day or two ago yet (strangely) there remain many who believe the UK to be in a poor position regarding Brexit.
Those unable to see the wider picture I suspect and whilst I for one do not expect everything Brexit-related to be trouble free, neither do I subscribe to the doom and gloom premonitions that still widely persist.

It seems that even Deutsche Bank see positivity ahead for the UK - and so says this Polish report (posted elsewhere in these forums too) :

Deutsche Bank bought two office buildings in London for 310 million pounds. The German giant assumes that in the long run Brexit will not negatively impact the market.

https://translate.googleusercontent.com/translate_c?depth=1&hl=en&prev=search&rurl=transla%20%20te.google.co.uk&sl=pl&sp=nmt4&u=http://forsal.pl/swiat/brexit/artykuly/1053341,brexit-juz-niestraszny-nawet-deutsche-bank-inwestuje-w-nieruchomosci-w-londynie.html&usg=ALkJrhjOY-QlwYdLj84BeJF84mVzdGyIyw

Thrugelmir

ilovehouses wrote: »

More Brexit bad news.

Not bad. Just the reality that it's in the interests of everyone to negotiate a fair settlement.

Herzlos

A slump of 20% in the 2nd biggest market will hurt them until they adjust, but is it going to be critical enough for them to blink first?

Will it just push people into buying cheaper German cars, thus moving the jobs around a bit? Will the EU insist that we have tariff free trade on cars, but not on financial products?

I'm pretty sure they can't/won't introduce anything asymmetric? Like tariff free cars EU->UK with a tariff coming back UK->EU?

A_Medium_Size_Jock

As well as Opel jobs in Germany being far from secure following the recent PSA purchase, it is recognised that VW already planned job cuts in Germany.
From November, 23,000 according to this:
http://www.bbc.co.uk/news/business-38023933

But it's more than cars where German jobs are going, with these announcements in the last week alone:

Bombardier to cut around 2,200 jobs in Germany - source

https://www.reuters.com/article/bombardier-germany-idUSL8N1JJ3T4

Allianz to cut 700 jobs in Germany in next three years: Sueddeutsche

https://www.reuters.com/article/us-allianz-jobs-idUSKBN19D2U6


Little wonder then that Germany's Finance Minister reckons that three-quarters of refugees in Germany will still be unemployed in five years time.
https://www.ft.com/content/022de0a4-54f4-11e7-9fed-c19e2700005f?mhq5j=e2

Conrad

Herzlos wrote: »

A slump of 20% in the 2nd biggest market will hurt them until they adjust, but is it going to be critical enough for them to blink first?

Will it just push people into buying cheaper German cars, thus moving the jobs around a bit? Will the EU insist that we have tariff free trade on cars, but not on financial products?

I'm pretty sure they can't/won't introduce anything asymmetric? Like tariff free cars EU->UK with a tariff coming back UK->EU?

As we said all along, reality will hit hard, a deal will be done.
See my signature...

kabayiri

We should see this as an incentive to change, not attempt to maintain the status quo.

By 2019 we will be on the cusp of the next wave of automotive transport.

The move to self drive will bring new entrants to the market who are not traditional car makers. They will source the hardware from China to keep costs down, and put more into the infrastructure and pricing systems.

We could be at the forefront of all the supporting systems needed to make a new transport model viable. One where costs do relate to journeys made.

Even modest German cars are getting too expensive for many UK workers anyway. You can see this with the growth of a brand like Dacia. The desire is there for cheaper transport.

Conrad

The 2 new aircraft carriers we are launching are another underlining of our projection of global power and influence.


As pointed out in the past, these are another ace to add to our hand given we are the main military safeguarding fleet of oil supplies coming into Europe.


UK is valuable strategic partner for Europe, I just with Remainers would get behind our strong negotiating hand and stop relentlessly painting us as a weak petitioner to be thrown scraps.

kabayiri

ilovehouses wrote: »

...
So yes, regardless of Brexit the UK needs to think hard about the transition. The last thing we need in the future is people who have been unemployed 20 years still calling themselves car workers in the same way miners did.

We have to be smart as to where we push investment.

I agree with Corbyn that investment is necessary, I just don't trust he knows where it will deliver value.

HS2 could easily be £80bn in cost, as an example.

That money could easily buy the most advanced road comms network in Europe, particularly around the congested SE.

Put in the infrastructure; make it a great open platform for people to develop and pilot ideas on; and the innovators will flock.

UK drivers are a mature; well developed marketplace; who understand what is needed.

GreatApe

The UK will need to buy cars but we don't need to buy expensive cars. So while the average spend on cars might fall the unit number probably won't fall much.

So if the UK does go into a recession its more likely to impact Germany auto sales than Japan auto sales

Herzlos

Just like the last recession we'll likely replace cars less often too (we seem to be unique in Europe in regarding a 3 year old car as old), pushing the price of used cars up.