Road ahead for Automotive Sector
A new economic report by Atradius () highlights that economic uncertainty has led to a 6% drop in new car registrations in the first half the year and a significant decline in investment; from £1.7 billion in 2016 to just £347 million in H1 of 2018. Atradius’ Automotive Market Monitor goes on to predict a rise in non-payments and insolvencies across the sector this year alongside the potential for future disruption.
“Uncertainty isn’t just a frustration to business, it is a potential catalyst for failure as it diminishes confidence and undermines the foundation for future growth”, comments Tom Danson, Head of Commercial for the Atradius Midlands region. “The industry has not only been impacted by uncertainty caused by the government’s plans to cut emission targets but also by the limbo of the ongoing Brexit negotiations, which keep continue to fuel concerns in the sector.
“UK automotive manufacturers are reliant on access to free and frictionless trade with the EU, and there is therefore concern that manufacturers could decide to divert further investment outside the UK. A hard Brexit outcome ending access to the single market and customs union without any interim arrangement would severely hurt both producers and suppliers.”
The Atradius report considers the potential impact of a no-deal Brexit, which could see UK car production becoming more expensive should tariffs rise.