Brexit to hamper carmakers across the globe

France: Brexit is supposed to pose a threat to the economic interests of the United Kingdome. Also, the auto industry across the globe is to bear the consequences as the shares of European and Asian automakers' fell sharply. The European auto industry dived 8 percent overall, with PSA Group declining by 17 percent and Renault witnessing a fall by 13 percent.

The pound fell around 10 percent against the dollar to touch levels last seen in 1985. As PSA does not have any manufacturing facility in the country, its sales in UK are among the most susceptible to the effects of Brexit. In order to maintain its competitiveness in the market, the company is forced to raise prices of its Peugeot and Citroen models, which is expected to shrink its presence in the market.

A spokesperson of the company said, “Managers are looking at different scenarios for price adjustments to our brands' models to respond swiftly to the markets' reaction.” He further added, “It was still too early to measure the real impact."

Nissan, an Asian car maker, is among the most exposed automaker, as it has its Sunderland assembly plant serving Europe and other countries. Carlos Ghosn, who heads both Nissan and its alliance partner Renault said, "There are going to be a lot of questions about (whether) you want to continue to invest in the UK for Europe if the UK is outside Europe."

Moreover, the Britain's largest carmaker, Jaguar Land Rover, which employs around 25,000 people in the country issued a note of calm, stressing that "nothing will change for us or the automotive industry overnight." However, the Indian-owned company is wary of Brexit as it would wipe USD1.37 billion (1 billion Pounds) from its annual profit within a few years.

According to a recent report published by TechSci Research, “United Kingdom Tire Market Forecast and Opportunities, 2021’’, the country’s tire market is dominated by the replacement segment, which would continue to dominate over the next five years. Major factors driving the replacement market include declining replacement period of tires, expanding automotive fleet size and increasing online tire sales in the country. In 2015, the country’s tire market was dominated by the passenger car tire segment, which accounted for more than 80% of the total tire demand in the UK, followed by light commercial vehicle and medium & heavy commercial vehicle tires.

TechSci Research is of the view that with Britain exiting the European Union, the investors would become sceptical about investing in the United Kingdom. Moreover, the auto industry in the country would witness a slowdown on account of increased prices, resulting in the decline in the sales, in turn hampering the replacement dominated tire market of the country.