Savoring a Brexit of champions appears to be an elusive outcome at this point as automotive executives are expressing little confidence that Britain and the European Union can arrange a suitable separation agreement by the established Oct. 31 dissolution deadline.
The possibility of a “no deal Brexit” under subsequently harsh circumstances is a key concern.
Negotiations between the governmental parties appear to have stalled, resulting in near-universal dismay among business leaders on both sides of the English Channel. Although 51.9 percent of England’s electorate opted to break ties with the EU in June 2016, the prospect of a do-over vote has yet to gain suitable traction despite widespread regret over a decision made amid nationalistic fervor and the belief that the EU was holding too much sway over Britain’s economic affairs.
“It is utterly unacceptable that, more than two years since negotiations started, industry still does not know what the UK’s relationship with the EU will be in the coming weeks and months,” says Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), which represents more than 800 British OEMs and aftermarket enterprises. “Uncertainty has already caused serious damage – car plants are on enforced shutdown, investment has been cut and jobs lost.”
Hawes has been calling for all the involved officials “to take ‘no deal’ off the table for good, and guarantee a positive long-term resolution that delivers frictionless trade. If they fail, we face yet another devastating ‘no deal’ precipice” at the end of October.
“Brexit is a very real challenge facing every UK industry. The automotive aftermarket, however, is facing a particularly volatile” situation if negotiations are inconclusive or unsuccessful, according to Natalie Davies, a marketing executive at sales-I, a supplier of software products with offices in England, Australia and Chicago. (**sales-i is written all lowercase, my spellcheck insists on capitalizing the “i”**
“This uncertainty is piling the pressure on businesses up and down the UK. How Brexit will impact the British automotive aftermarket is not an exact science and relies heavily on the deal struck between the UK and Brussels,” she adds, referring to the EU’s headquarters in Belgium.
“The automotive industry has been consistent and united – a ‘no deal’ Brexit would have a devastating impact on the sector and the hundreds of thousands of jobs it supports. It would end frictionless trade, add billions to the cost of importing and exporting and put jobs at risk,” says Hawes. “We believe that a ‘no-deal’ should be taken off the table for good to end damaging uncertainty that has undermined investor confidence and forced companies to spend millions on ‘no deal’ contingency planning.”
He further insists that “government must secure a future deal with the EU which guarantees frictionless trade and the free movement of goods between the UK and the EU; retains the UK’s preferential trading relationships with third countries such as Japan, Canada, South Korea and Turkey; and maintains the sector’s ability to access EU talent and move employees freely across sites in the UK and EU.”
A high-ranking British automotive executive, insisting on anonymity because “we don’t comment on political matters,” points out that “our concern in relation to Brexit is to prepare for whatever scenario ensues. At the moment, we’re just waiting to see what happens, so preparations/initiatives have been more or less paused for now.”
The executive observes that “we can’t really comment on supply chain challenges when all bets are off, which they seem to be at the moment. We don’t know about the Brexit deal – or if there will even be a Brexit yet. We don’t know what kind of deal will eventually be approved – or if there will be another vote on Brexit.”