We reported earlier this week that European automotive leaders were united in getting a deal over Brexit. Ediz Fahri, Senior Economist at Dun & Bradstreet says the closures and relocations of UK automotive manufacturers could have a downstream effect on SMEs in the industry.
“The UK automotive industry is facing challenges this year from weakening global demand and uncertainty around the risk of a ‘no-deal’ Brexit. Traditional business models have struggled to match industry trends, realised by weakened demand and margins.
“According to Dun & Bradstreet data in 2019, the manufacturing of parts and accessories for motor vehicles represents half of the UK’s automotive trade and around three-quarters of firms in the industry are identified as ‘micro-businesses’.
“This highlights the potentially disruptive impacts on SMEs across the UK’s automotive supply chain in the event of a production relocation or plant closures.
“According to the 2019 UK Automotive Sustainability Report, international demand for autos accounts for 81.5 percent of total cars produced in the UK in 2018 – a historic high and positive overall for the UK export market.
“This high level of integration with global markets also poses a risk. The ongoing risk of a ‘no-deal’ Brexit continues to pose operational and financial threats to the UK automotive industry due the industry’s dependence on favourable tariffs and other trade policies in meeting global demand.
“While uncertainty is clouding the country’s medium- to long-term outlook, Dun & Bradstreet’s country insight snapshot notes that the UK’s long-term economic potential exceeds that of many other European countries.”