UK car industry investment slump linked to Brexit uncertainty

UK car industry investment slump linked to Brexit uncertainty

“2017 will be tougher”

A 21ST CENTURY record for car production in Britain has been muddied by news that investment in the sector slumped by a third last year.

The reduction to £1.66 billion, against around £2.5 billion in both the previous two years, took the shine off the announcement that 1.722 million cars rolled off assembly lines last year.

Jaguar Land Rover and Nissan produced more than 500,000 cars apiece as national production for the year rose by 8.5 per cent.

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The SMMT industry body that collated the figures and that before the referendum had campaigned to keep Britain in the European Union, made it plain that the slowdown — comprising mainly inward investment, because all the big car plants are foreign-owned — reflected the Brexit vote.

“If you look at the figures, and it is what we hear anecdotally, you do see companies at least delaying decisions because of the uncertainty,” Mike Hawes, chief executive of the SMMT, said.

“The industry view is that 2017 will be tougher”

Mr Hawes also cautioned against those who would claim that higher car production was Brexit-related. He said that the highest output since 1999 was the result of investment made four or five years ago, reflecting the introduction of new models to assembly lines.

UK car production in 2016 by manufacturer

UK car production in 2016 by manufacturer

The protectionist stance taken by Donald Trump is also something to worry British carmakers, experts said.

Last year the United States was the single biggest market. This was on the back of Jaguar’s success selling its F-Pace there, sales of the Swindon-made Honda Civic and the focus of the luxury carmakers Bentley, Rolls-Royce, Aston Martin and McLaren switching their marketing attention away from China.

Sales to the US leapt by 47 per cent to nearly 200,000 accounting for one in seven exports.

Top UK car export destinations

Top UK car export destinations

“The industry view is that 2017 will be tougher,” Stuart Apperley, head of automotive at Lloyds Bank, said.

Britain exports four in five of the cars it produces, with 56 per cent of those destined for the European Union.

This article first appeared in The Times