By on January 16, 2019

british-leyland-mini

With Britain’s parliament rejecting Prime Minister Theresa May’s latest Brexit deal, European automakers stand to face some strong headwinds in the near future. As of now, no clear path lies ahead. Many believe the European Union will continue playing hardball, punishing Britain for leaving. But, even if it doesn’t, loads of regulatory and trade issues must be resolved in short order to avoid problems.

There’s also no shortage of hyperbole surrounding the issue. Just this morning I heard cable news call it “the largest crisis in Britain’s history,” as if World War II never happened. A channel away, another outlet proclaimed how splendid it would be for trade between the United Kingdom and United States.

Regardless of which side of the fence you fall, there’s more at stake here than Theresa May’s job. Automakers, who like consistency above all else, worry a no deal plan for “British independence” could be tantamount to flipping the industry table. They don’t like being caught up in the uncertainty surrounding Brexit, and there appears to be an endless list of issues to contend with. 

“I’ve done what any sane person would do: I’ve assumed the worst,” Aston Martin CEO Andy Palmer said onstage at the Automotive News World Congress in Detroit. “I’ve assumed we will crash out of Europe, and in consequence our supply chain will be disrupted.”

Last week, Aston Martin authorized contingency planning for Brexit, including hiring a new supply chain chief and shipping car components via air freight to avoid relying on Dover — a port which could be in serious trouble later this year. However, the Port of Dover recently said it was “prepared” for a no deal Brexit despite asking for government assistance to keep things operating smoothly.

Aston isn’t alone. According to Bloomberg, Volkswagen-owned Bentley began shipping some components via alternative ports in preparation for Brexit. “I may have to eat these words — we are prepared,” CEO Adrian Hallmark said.

“We took note of the results of the vote in Britain’s parliament with regret,” Volkswagen said in a statement. “It represents a further phase of uncertainty and hampers our ability to plan ahead. We and the entire industry need clarity about the nature of relations between Britain and the European Union. Every further delay in the Brexit decision-making process puts investment and jobs at risk.”

Daimler said it is doing everything it can to ensure product and parts continue moving freely between the United Kingdom and mainland Europe after Brexit. It also noted it could only do so much without formal agreements in place.

You might have noticed a theme here, one in which automakers tout their preparations in a manner that makes it hard to believe them. That’s the problem; nobody really knows what to expect. It’s Y2K all over again. Except, this time, something will actually happen when the clock strikes midnight on March 29th.

From Bloomberg:

Following Tuesday’s vote in Parliament, BMW AG and the German car industry group VDA issued grave warnings of the fallout from a so-called hard Brexit. BMW, which owns two iconic English brands — Rolls-Royce and Mini — said in an emailed statement that the uncertainty of U.K. and EU trade relations are “greater than ever” and that it has to prepare for the worst.

A no-deal Brexit looks increasingly likely and would have “severe consequences,” VDA President Bernhard Mattes said in an emailed statement.

The drag from the looming deadline is already coming through to weigh on the region. Last year, annual car sales in Europe dropped for the first time in five years, led by a sagging U.K. market where consumers spooked by Brexit delayed buying big-ticket items like cars. Registrations in the U.K. fell by 6.8 percent last year, the steepest annual decline since the financial crisis.

“The consequences of a ‘no deal’ would be fatal,” VDA said after the vote. “Without an orderly and practical solution for business, jobs in the car industry, particularly on the British side, are on the line.”

Britain would likely have it worse than the European Union. But virtually every automaker on the planet would find themselves affected to some degree. Supply chains are likely to become a mess without help, and no one has any sense of what will happen to vehicles exported into the EU from the United Kingdom. There’s also the possibility of vehicles being held up in customs or subjected to new tariffs — which would be awful news for high-volume vehicles with slimmer profit margins.

What’s the solution? Either Britain and the EU need to start making new deals immediately or there needs to be another referendum. However, asking the British population to vote again would be a colossal constitutional betrayal. The people already voted to leave; asking them again would cast serious doubt on the government’s intention to do their bidding. It looks like automakers might just have to sweat this one out and hope for the best.

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39 Comments on “Automakers Understandably Freaking Out Over ‘No Deal’ Brexit...”


  • avatar
    dukeisduke

    Things may suck for Brexit right now, but May did survive a no-confidence vote. Now they just have to find another way forward.

    And yeah, “the largest crisis in Britain’s history” is way overblown. It’s not 1940, and there aren’t people running around in the attic of St. Paul’s Cathedral with buckets of sand, trying to extinguish the white hot glowing magnesium of incendiary bombs that have crashed through the roof.

    • 0 avatar
      Matt Posky

      It looks as though she’s heading back to the mainland later this month to talk turkey and hopefully get some concessions from the EU. Maybe this time she’ll get lucky.

      • 0 avatar
        FreedMike

        So in other words…to validate the UK’s conviction that they were being screwed over by the EU and the only way to stop the screwing was to leave, May has to go get screwed over some more.

        Makes perfect sense, if you’ve dropped peyote.

        • 0 avatar
          TwoBelugas

          Mike

          you have it backwards.

          The ongoing difficulty of leaving the EU is in fact validating the Leave side’s claim that the EU is a behemoth who won’t allow its members to leave without inflicting heavy damage to it, thereby depriving its members of their independence.

          And the UK was not even fully integrated yet with the currency and a bunch of other things still not within the Euro core zone.

          • 0 avatar
            Astigmatism

            Not being able to have your cake and also eat your cake is not “inflicting heavy damage,” it’s just how cake works.

          • 0 avatar
            FreedMike

            Exactly, the EU is a beast, the pro-brexit people knew that leaving it would be a s**t show. Were they real with the citizens of the UK about it? Of course not. If they had been, I doubt brexit would have passed.

            I’m not unsympathetic with their concerns about the EU. I’m just unsympathetic with the argument that the only way to fix the house is to burn it down.

  • avatar
    TrailerTrash

    Two very wrong statements here.
    1 “Britain would likely have it worse than the European Union.”
    Nobody has it worse than being part of the EU.
    Please, the violence and the uprisings in Europe are just beginning. The ruling elites are going to soon realize their ideas and decisions ruined Europe and the common folks are fed up.
    2 “Either Britain and the EU need to start making new deals immediately or there needs to be another referendum.”
    Bull. There can be the obviously voted for end…just leaving the damn EU.
    This is what was voted for by the people and it should happen.
    The Sky Will Fall from the powers that be are all bull.

    A new deal is JUST what the losers intended all along.
    Stall…then get a new vote.
    Hell, it is just what the deep state here in America is demanding…a redo of the lost 16 election.
    But elections and referendums have consequences, as Obama is proud to have pointed out.

  • avatar
    FreedMike

    Raised-middle-finger, burn-the-barn-down-to-save-it populism is easy. The real world is quite different, as folks in the UK are figuring out.

    • 0 avatar
      TrailerTrash

      wrong.
      it is all the real world, even the let it burn.
      the armageddon is the falsehood.

      • 0 avatar
        PrincipalDan

        At least we’re having a discussion – even the people freaking out about Alexandria Ocasio-Cortez are now willing to talk about marginal tax rates. Trump made people talk about trade apart from the orthodoxy of “free trade”.

        • 0 avatar
          Robbie

          I feel that Alexandria Ocasio-Cortez may be a sign that the left will respond with a set of irresponsible populist solutions of its own. Far left and far right: both will want Brexit; both will want trade barriers; both would refuse to appoint a genuine scientist to EPA head; both will want insane foreign policies…

      • 0 avatar
        FreedMike

        Armageddon? LOL…you mean, the “our culture is doomed to armageddon” card the pro-Brexit folks played HARD leading up to the vote?

        No, it’s not armageddon. It’s just a step back for them economically, and no one really knows how far back they’ll be stepping.

        Clearly no one thought this through.

        • 0 avatar
          TrailerTrash

          hey, feed, it wasn’t the pro bexit crowd doing this shouting.
          amazing how you forgot about the waal street crash the day before and after the vote or the remarks of the no exiters during the pre-vote.
          if you cannot remember,or simply don’t know what you are talking about, there is nuthin anybody can do about it.
          you are as you are

          • 0 avatar
            FreedMike

            Bulls**t. The prime argument for brexit was “our political and cultural sovereignty is being threatened.” Full stop.

            And, for the record, maybe they were right about that; certainly that’s a valid concern in any case. But they decided to burn down the house when fixing it might have been a better option.

            Put differently: do you really think brexit would have been approved by the voters if the people pushing it had been real with UK voters about what would follow? Yeah, right.

            Rash decisions have consequences.

          • 0 avatar
            TrailerTrash

            our political and cultural sovereignty is being threatened.” is NOT shouting the sky is falling, so please stop with the cussing cause it doesn’t fill in your ignorance.
            i spoke to the wall street fall, you did not address.
            i spoke to the european and elitist warnings about the crash…you still don’t respond other than presenting a solid point they, as well as all the nationalist in europe, are saying.

            and don’t start about nationalism being bad.

          • 0 avatar
            Art Vandelay

            @Freedmike…You can’t fix the house if you are just renting it and the landlord won’t let you make any repairs. The crapshow that has unfolded as they attempt to extricate themselves from the EU just illustrates how crappy the lease they were locked into was. Sometimes you have to start over. I mean didn’t we try to fix our house prior to 1776?

  • avatar
    TrailerTrash

    Two very wrong statements here.
    1 “Britain would likely have it worse than the European Union.”
    Nobody has it worse than being part of the EU.
    Please, the violence and the uprisings in Europe are just beginning. The ruling elites are going to soon realize their ideas and decisions ruined Europe and the common folks are fed up.
    2 “Either Britain and the EU need to start making new deals immediately or there needs to be another referendum.”
    Bull. There can be the obviously voted for end…just leaving the damn EU.
    This is what was voted for by the people and it should happen.
    The Sky Will Fall from the powers that be are all bull.

    • 0 avatar
      PrincipalDan

      Let the sky fall
      When it crumbles
      We will stand tall
      Face it all together

      Let the sky fall
      When it crumbles
      We will stand tall
      Face it all together
      At skyfall
      At skyfall

  • avatar
    FWD Donuts

    Can’t the UK tell the EU to stuff it then operate under the standards set by the WTO?

    • 0 avatar
      TrailerTrash

      the problem is there as it is here,the multinational companies care not about England or any country…only their bottom lines.
      that’s ok, its what they are supposed to do.
      however nations and their people should do likewise. and if the powers fight, let them complain.
      but don’t take their cries of horror as anything more than self-promotion.

      brexit.

      • 0 avatar
        TwoBelugas

        The irony is, when large corporations try to influence Britain’s foreign policy, the intelligentsia sees that as a positive thing and must be supported at all cost, because reasons.

        When large corporations try to influence the course of American foreign policy, it’s the end of Democracy as we know it, because reasons.

        LOL.

    • 0 avatar
      Astigmatism

      They could, but most Brits don’t want to live with the consequences.

      Today, if a shopkeeper in Tottenham places an order from a French supplier in the morning, the order can pass through the Chunnel that afternoon and be at his shop in the evening; without a trade union, all of that will need to stop at the border, be inspected, be subject to a tariff, etc.

      Today, you can drive from Dublin to Glasgow without stopping; without a deal, border checkpoints have to go back up (which you may recall led to about a hundred or so years of “troubles” the last time they did it).

      Today, an English citizen living in Paris can go about his life just as if he were in London; without a customs union, every Brit on the continent will need to apply for and obtain a visa (remember there wouldn’t be a visa treaty in place) lest they be in the country illegally, would have to pay taxes in France as well as England, may have restrictions on property ownership, etc.

      And of course that’s not counting more gradual diversion of regulations, so that if GlaxoSmithKline wants to sell a new pharmaceutical on the mainland, they’ll have to get it separately approved by the EU regulators in addition to the UK regulators.

      None of this is good for either side.

      • 0 avatar
        WallMeerkat

        “Today, you can drive from Dublin to Glasgow without stopping;”

        If you live in the universe where they built the Irish sea bridge, or you have a back to the future flying car, yes.

        Meanwhile in the real world you need to take a ferry from Belfast to Cairnryan.

        Even at that, the term ‘stopping’ – the A1 is a fudge around Sprucefield, you will likely need to stop at the roundabouts around Hillsborough, then if you are heading for the ferry to get to Glasgow you will need to stop at the end of the Westlink – the funding for getting this freeflow was originally coming from Europe as part of the E01 euroroute…

        “border checkpoints have to go back up (which you may recall led to about a hundred or so years of “troubles” the last time they did it)”

        The original border checkpoints were for customs, before UK and Ireland had a customs arrangement. The later border checkpoints were anti-terrorism, checking for bombs, guns etc. These days you just keep driving, the road signs and markings change. A bit like driving between US states.

        • 0 avatar
          Astigmatism

          Sorry, my brain subbed in Glasgow for Belfast. The point being that a hard border between Northern Ireland and the Republic of Ireland is a necessity if Britain wants to be able to control immigration between it and the EU but anathema to the Irish, which is why no-hard-border was one of the (many) (false) assurances of Brexit.

  • avatar
    Art Vandelay

    What if following a so called “hard brexit” The US basically offered NAFTA terms to the UK or even treated them to something akin to the 51st state. Would European manufacturers doing large amounts of business with the US look at setting up shop there? I’d like to see us look at this as an opportunity. I mean heck, the NFL wants to put a team in London. We have a special relationship with the UK, right? Let’s bring them tighter in to the fold. Win Win unless you are in the EU.

  • avatar
    Kendahl

    The EU would be an unalloyed success if it limited its actions to economics including trade. Instead, it wants to be the federal government in a United States of Europe that demotes member countries to the status of provinces. It decides on social policies and orders the members to change their laws to conform. That generates resentment.

  • avatar

    Last time Germany played hardball it did not end well for Germany, did it? It is not like Germany is a superpower and England a banana republic. Right now EU is German Reich economically. Italy and other less developed countries suffer tremendously not being able to control own currency.

    EU to work it should be like USA – no nationalities, same culture over all Europe and so on. Country based not on nationality but common European ideal whatever it might be. In other words “one Nation under God, indivisible, with liberty and justice for all.”

  • avatar
    JoDa

    Keep Calm and Slave On.

    Resistance is Futile.

  • avatar
    WallMeerkat

    The UK has no volume car maker anymore, BMW helped to kill off the remains of British Leyland – Rover. (You may remember them from the SD1 exported to the US, or Sterling the Honda based 800)

    What is left are a collection of premium/luxury marques – MINI which are BMW designed premium small calls, Jaguar a luxury sedan/coupe/SUV marque and associated Land Rover which has gone upmarket. (MG kinda survived Rover but are built in China)

    The UK is a huge import market now, Europe should be panicing at the possibility of Ford Fiesta, VW Golf and Mercedes C Class sales being affected.

  • avatar
    schmitt trigger

    I have faith that the British people are a tough and hardy bunch.
    In the long run, they will be fine.
    In the short term, there will be significant economic pain.

    However, what they urgently require is a no-nonsense, tough leader right now.

    Unfortunately May is no Churchill.

    • 0 avatar
      FreedMike

      Well, yeah, but staying in the EU wasn’t the same thing as being invaded by Nazi Germany…not by a long shot. Different threats call for different leaders.

      May has failed, but I’m not sure how much of it to pin on her. I’d actually lay the blame at the feet of the politicians who pushed brexit knowing full well it’d prove to be a s*it show, and didn’t really let voters in on that. If they had, I doubt brexit would have passed in the first place.

  • avatar
    darex

    BMW has already hedged their bets. VDL-Nedcar in Born, NL will now see a huge bump in output.

  • avatar
    pbx

    35 years ago, road tripping in England, end up in Leeds, population half million. Tired of bangers and mash and pub food decided pizza would be ok. First person I asked to point me to a pizza joint replied, “Pizza? This isn’t bloody Italy!”

    Some things just don’t change.

  • avatar
    kkop

    “Many believe the European Union will continue playing hardball, punishing Britain for leaving”

    Punishing? LOL! The EU is merely holding Britain to their obligations. The truth of this matter is that Britain should never have joined the EU in the first place. It’s always been clear over the years that Britain was a reluctant member. Both the EU and Britain are better off with a swift Brexit.


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