16 year high for car manufacturing, but Brexit causes concerns for top businesses

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2nd August 2016 12:19 - Automotive

16 year high for car manufacturing, but Brexit causes concerns for top businesses: The automotive manufacturing sector has seen the largest rise in production since the millennium, with nearly 900,000 vehicles being produced in the UK being reported in the first half of 2016.16 year high for car manufacturing, but Brexit causes concerns for top businesses

UK total car production was ahead of the UK average, seeing a 10 per cent rise since last year.

The survey was of members in the Society of Motor Manufacturers and Traders, which includes Toyota, Nissan, Mini and other smaller manufacturers, all accounting for a considerable percentage in the UK and EU automotive market.

June was the 11th month running with growth in the industry. Nearly 159,000 cars and other such vehicles were rolled off the production line in one month which was the best June productivity seen since 1998.

The growth in the sector is likely to be a result of massive investment over the previous years – Nissan has seen billions of pounds of investment in production lines.

Despite the workers in automobile manufacturing contributing around double the money (£111,800) compared to the national average, many of those car businesses surveyed have voiced their concerns about Brexit. They are worried that the sector will be able to sustain the growth it has been welcoming in the previous years.

77.8 per cent of UK-made cars are exported to around 100 countries throughout the world, the main market for them being in Europe. This is what has led to concerns from companies in the SMMT such as Toyota, who alone send 75 per cent of their vehicles produced to Europe.

There are many ways that leaving Europe may affect SMMT companies. Without a trade deal, there may have to be tariffs on both cars being sold and imported components for production. Toyota said these may well be up to 10 per cent for their cars. With EU imports accounting for over half of all components used for car manufacture, this would push up the price of production and lead to increased costs for businesses.

Additionally, many EU nationals are employed by the automotive industry. A Brexit may lead to a loss of these employees to companies in mainland Europe, as their future in the UK looks uncertain.

Over half of those answering the survey said they think that both employers find employee loss a principal worry and that Brexit will have a negative impact on their businesses.

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