Amid Brexit Mess, UK Car Production Reels from Worst November since Financial Crisis

No one knows what’s going to happen.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

Vehicle manufacturing in the UK slumped by 19.6% in November compared to the same month of 2017, amidst rising fears about a no-deal Brexit as well as slowing sales in the world’s largest automotive market, China. With around 30,000 fewer cars produced, it was the biggest year-on-year fall of any November since the financial crisis of 2008, when output shrank by more than 32%.

The industry has now racked up six consecutive months of falling production, according to the industry group, the Society of Motor Manufacturers and Traders (SMMT). Year-to-date, total car production in the UK is more than 8% lower than it was in the first 11 months of 2017. If anything, the trend appears to be accelerating, with November’s 19.6% year-on-year drop in production roughly double the 10% drop registered in October. The chart (courtesy of SMMT) shows rolling-year car production totals — the total amount produced over the twelve-month period:

Rolling-year total production reached a post-crisis peak of around 1.75 million in mid-2016, just after the Brexit referendum. Since then, rolling year totals have fallen 12% to 1.54 million last month, down by over 200,000 units from the 2016 high.

Around one out of five of the cars manufactured in the UK are bought by UK consumers. And those consumers are consuming less. Production for the UK market was down 1.9% year-on-year in November and 16.8% in the year to date. That’s a total of 55,000 fewer cars being built for British consumers. Also in November UK new-car sales fell by 3%, with diesel models particularly hard hit. Two months earlier, the industry suffered its worst fall in sales of any September since the crisis. As long as sales continue to fall, so too will production for the internal market.

But it’s in the export market, accounting for just over four out of five cars produced in the UK, where the most pain is being felt. Exports dropped 22.8% in November, the fifth monthly fall in a row. So far this year, 75,000 fewer cars have been built for overseas markets than between January and November 2018.

Much of the blame is being placed on the uncertainty around Brexit, which is scheduled to happen in just over three months’ time — though it may not happen at all.

Brexit not happening would be the perfect outcome for car manufacturers in Europe which, as just about everywhere, rely on “just-in-time” and “just-in-sequence” delivery and production systems. For example, Toyota claims that it keeps no more than four hours’ worth of parts on-site at its Burnaston plant. By triggering lengthy delays and other obstacles at the UK-EU border, a no-deal Brexit has the potential to throw sand into the finely tuned gears of those fragile logistics systems.

“Every day 1,100 EU trucks cross the Channel to deliver to car and engine plants in the United Kingdom alone,” said the Brussels-based European Car Manufacturers Association, known by its French acronym ACEA. “After Brexit, even short hold-ups at customs will cause massive logistical problems, disrupting the production process and generating significant costs.”

On the other side of the English Channel SMMT is even more concerned about the threat a crash-out Brexit could pose to the car industry. “Thousands of jobs in British car factories and supply chains depend on free and frictionless trade with the EU – if the country falls off a cliff-edge next March the consequences would be devastating,” said Mike Hawes, SMMT Chief Executive. “With fewer than 100 days until the UK leaves the European Union, the automotive industry needs certainty and a ‘no-deal’ Brexit must be ruled out.”

For the moment that isn’t happening.

This comes in addition to the collapsing demand in Europe for cars with diesel engines and the effects of the introduction in the EU of tough new emissions and fuel efficiency procedures.

As the likelihood of a crash-out Brexit rises, companies are frantically drawing up contingency plans. The five biggest car makers operating in the UK are:

  • Jaguar Land Rover, which built 544,400 cars in the country in 2017, 80% of which were exported overseas.
  • Nissan, which reached total UK production of 495,200 vehicles in 2017, down slightly from 2016.
  • BMW, which churned out 218,800 minis from its Oxford plant last year.
  • Honda (164,160 units in 2017)
  • Toyota (144,070 vehicles in 2017)

With EU markets accounting for 53% of all UK car exports, these (and many other) car makers are concerned about what could happen in the event of an unruly Brexit. Tariffs alone could add at least £4.5 billion to industry costs, says SMMT. Toyota said no-deal Brexit could disrupt their UK-based production for weeks, if not months. German manufacturer BMW has announced that it is planning to close its Mini plant in Cowley for a whole month after the UK’s official departure from the EU, to minimize the impact of a no-deal Brexit.

A hard Brexit could set back Jaguar Land Rover — which is owned by the Indian company Tata — more than £1.2 billion ($1.5 billion) a year, says the group’s CEO Ralph Speth. “It’s horrifying, wiping out our profit, destroying investment in the autonomous, zero-emissions (world) we share,” Speth said.

Following months of losses, Jaguar Land Rover introduced a three-day week for its 2,000 staff at its Castle Bromwich plant in the lead-up to Christmas, citing Brexit uncertainty and sliding sales of diesel-powered cars. The company has already cut 1,000 jobs this year and is rumored to be planning to slash up to 5,000 more in the new year as part of a £2.5 billion savings plan.

Pre-Brexit angst is not the only thing hurting Jaguar Land Rover’s bottom line, which this summer slipped from pretax profit into pretax loss for the first time since 2015. The company, like many others, is also reeling from the impact of falling car sales in China, its biggest export market that accounted for nearly a quarter of the firm’s global sales in 2017. By Don Quijones.

China’s Auto industry panics, overcapacity spreads, but government brushes off the wailing and gnashing of teeth, looks to EVs. Read…  China Auto Sales Plunge, Face First Annual Decline in 30 Years

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  58 comments for “Amid Brexit Mess, UK Car Production Reels from Worst November since Financial Crisis

  1. Althea
    Dec 25, 2018 at 4:19 pm

    Europe’s overall economy seems to be slowing.

    Diesel cars are being rejected, after a big push to adopt them, as being too environmentally destructive. In the fallout of the German companies cheating on emissions tests, some cities are talking about banning diesel cars completely. Demand for diesel cars in those cities can’t be very good.

    And at the very end of the piece drops the minor data point that sales in the largest country in the world have been dropping.

    So, overall sales are down, the executives are desperate to deflect the concerns of the shareholders. Brexit did it! Hey, after the “Russians did it!”, its the number one excuse in Britain these days.

    I’m not saying that post Brexit won’t have an impact, especially with MayDay staking her political standing on the notion that if she’s pushes everything right up to the deadline of a hard-Brexit she will win a political victory by getting her deal passed. But, the post-Brexit effects aren’t the reason why they aren’t selling diesel cars either at home or into Europe.

    • Ronnie
      Dec 25, 2018 at 8:40 pm

      German car industry lies. German workers pay the price. Share holders lose money. What’s not to like. Cheaty come fare. You lie. You Cheat. You pay.

    • Dec 26, 2018 at 12:20 am

      The Russians did Brexit as well you know.

      No doubt the Russians will be blamed for the excellent showing at the EU Elections in May of parties supporting Orban, Salvini, Kurz, Le Pen et al.

      2019 is set to be a very interesting year.

      By September I’ll expect we’ll have said goodbye to the following Europeon politicians.

      Bye-bye Merkel (G7 Summit swansong)
      Bye-bye May (likewise, or maybe straight after Brexit)
      Bye-bye Juncker (In June)
      Bye-bye Tusk (In June)
      Bye-bye Draghi (or soon after)
      Bye-bye Poroshenko (After March Presidential Election)

      A despicable bunch the above.

      • nick kelly
        Dec 26, 2018 at 5:26 pm

        More despicable than the favorite? I think the above are WAY behind.

    • HMG
      Dec 26, 2018 at 1:16 am

      I do not believe that the fall in UK car sales to date is primarily caused by Brexit. Up until a few weeks ago the odds were still on a ‘May’ or similar deal.

      What is happening is a reflection of the U.S. and matching UK Stock Market falls along with signs of weakening property prices in the U.S., UK , Australia and other Western Countries.

      Common sense dictates that the marginal buyers , buyers who can defer their purchases for a few more months or longer are waiting to see whether the increasingly likely asset bubble meltdown starts to dramatically change the landscape.

      From the background of 50 years involved with the UK car retailing ‘industry’ I can confirm that all previous slumps in car sales that have occured are invariably linked to a reductions in residential property values.

      This time will be no different.

      Regarding the Brexit effect. At present I think this is less significant at this point than the public’s confusion over whether, if they do decide to buy a car, they should purchase, or rather lease/PCP, a petrol, diesel or hybrid.

      • Paulo
        Dec 26, 2018 at 12:02 pm

        How about pain old unaffordability due to luxury and electronic gimmickry? Peak nonsense.

        We used to drive a ’64 Land Rover. A veritable tank, it would go anywhere with it’s 4 banger pushing it along. This weekend there was a story on the news about a stolen Land Rover SUV. It was valued at 150 K Canadian. My best friend once bought a brand new Mini back in the late ’70s. I think it was about $2500. Now, they start at 30K. Wages have certainly not increased by 10X since that purchase.

        Who would buy this crap, anyway? I do see quite a few Land Rovers and Range Rovers around, though. The nearest dealership is a 1.5 hour drive away. Nice and convenient just to impress strangers with your ride.

        • char
          Dec 26, 2018 at 1:18 pm

          The new mini is twice as big as the old mini and is now a luxury brand. It sells to a completely different market niche.
          You sound like the people who complain that the new Golf is so much more expensive than the Mark 1 Golf. Logical because the latest Volkswagen Up! is closer to the Mark 1 Golf in size and market niche.

    • MD
      Dec 26, 2018 at 7:18 am

      ‘Sales’..? What are these ‘sales’ things of which you speak? Something from the 20th century, I assume.

      90% or car ‘sales’ in the UK are leases. Most car ads don’t even bother with silly pre-cheap-credit things such as price, because so few people are actually buying the car…

      That’s why the national motor industry body, the MCIA, reports ‘registrations’, not sales…

      So with the volume of 3 year-old used cars backing up as they are returned upon lease expiry, it’s no wonder new ‘sales’ take hit.

      • HMG
        Dec 26, 2018 at 11:59 am

        Leases !

        Exactly. When is the car actually ‘bought’ ?
        That may sound like a stupid question but it’s not.

        The manufacturer or importer effectively ‘buys’ or makes the car.

        The ‘dealer’ is then ‘sold’ the car and effectively ‘owns’ the car.

        Years ago it was ‘sale or return’ agreement but nowadays it’s called ‘wholesaling’. This means it’s actually invoiced to the dealer but funded by an “in house” finance Company but it is charged and ‘owned’ by the dealer. If he defaults the finance Co can take it back but generally the dealer “owns” and funds it until a retail buyer takes it off his hands.

        If it was a TV the key buyer would be Curry’s or John Lewis but due to this registration anomaly it only counts as a sale when it is Registered at DVLA.

        That is how the manufacturers maintain a stranglehold on the sale and distribution of cars to the detriment of the UK retail buyer.

      • Tykerman
        Dec 27, 2018 at 9:55 am

        I think you just nailed it MD. The private car is in it’s death spiral. Overcrowded roads and nowhere to park when you get there. My G. grandfather was a carpenter and wheelwright for horse carriages, the motorcar put an end to that and he had to change and adapt. That is what business is about. Pleased to say three generations later the business still thrives.

    • Leser
      Dec 30, 2018 at 10:06 am

      Re “the German companies cheating on emissions tests”:

      The VW story was a reprisal for the Apple story: a 20bn EU fine for tax avoidance levied on Apple was answered by a 20bn fine for VW levied by the US. A symbolic reprimand by the enraged empire with rather large practical consequences subsequently.

      Many buttons for managing engine behaviour are in the injection systems supplied by Bosch, Conti et al. Engines today are controlled by powerful computers with complex software. This software comes with very many levers which the suppliers explain to their customers, then leave them to adjust the buttons in what is a complicated grey area of rules and regulation.

      Notice that only VW ever was really dragged into the spotlight, and the suppliers completely stayed out of it. VW is a bit of a special case: symbol of industrial Germany which in turn is a core EU representative, a political angle with the state gov’t owning a minority in VW, the VW management at the time having made many enemies with its arrogance and absolutist style.

      VW’s “pollution” has always been a nonsense argument. As an example, the actual emissions by the “cheating” diesel engines are well below the level which is permitted as safe for indoor office environments in Germany.

      • Dec 30, 2018 at 12:02 pm

        “As an example, the actual emissions by the “cheating” diesel engines are well below the level which is permitted as safe for indoor office environments in Germany.”

        This is the most hilarious homemade nonsense tidbit I’ve seen in a long time. Thanks for the laugh!

  2. 2banana
    Dec 25, 2018 at 4:36 pm

    In 2017 – it looks like the UK imports far more more cars and cars parts than it exports.

    Easy solution to rectify if the EU wants to play hardball. Germany should be especially worried.

    See graph at:
    https://www.acea.be/statistics/article/motor-vehicle-trade-between-the-uk-and-main-eu-partners

    • char
      Dec 26, 2018 at 9:52 am

      Britain is important but not that important for the German car industry, but the car industry is really important for certain regions in Britain. Those regions will cry uncle long before Germany.

      • nick kelly
        Dec 26, 2018 at 5:21 pm

        The UK is a very large market for German cars coming just behind the US.

        ‘The largest market for German car manufacturers were the USA with an import value of roughly 26.9 billion euros. In comparison, the United Kingdom’s car imports from Germany amounted to 25 billion euros.’

    • HMG
      Dec 26, 2018 at 12:04 pm

      Maybe with 10-20% tariffs UK buyers will be ‘forced’ to buy Jaguars and not BMW, Audi or Mercs.

      They maybe marginally inferior but think of the balance of payment advantages for the UK as well as the gain in UK employment to the detriment of German employment,

      Win Win for UK ?

      • char
        Dec 26, 2018 at 1:00 pm

        BMW, Audi and Mercedes are luxury goods. Cheaper price doesn’t mean more wanted.

    • HMG
      Dec 26, 2018 at 12:06 pm

      Maybe with 10-20% tariffs UK buyers will be ‘forced’ to buy Jaguars and not BMW, Audi or Mercs.

      They maybe marginally inferior but think of the balance of payment advantages for the UK as well as the gain in UK employment to the detriment of German employment,

      Win Win for UK . No deal Brexit may not be as bad as people have been lead to believe.

      • fajensen
        Dec 27, 2018 at 7:46 am

        The UK car industry is not what it was and restoring it to what it was, before the EU came along, will probably be disappointing to those people who need reliability including those who wants an oil-free driveway!

        Well, lives will certainly be saved when people have to take a taxi home from the pub because “Lucas, Lord of Darkness” … post-Brexit, in true British car tradition. Could be a Win!

        Except Lucas is owned by TRW (US). Speaking of which: Are there any British car manufacturers?

        Major “British” Car manufacturers:

        Aston Martin (1913–present, Plc, UK)
        Bentley (1919–present, Volkswagen AG)
        Jaguar (1935–present, Tata Motor)
        Land Rover (1948–present, Tata Motor)
        Lotus (1952–present, Geely (China))
        Mini (1959-present, BMW)
        Rolls-Royce (1904-present, BMW)
        Vauxhall (1903–present, Opel (Groupe PSA))

        I think the only 100% British-owned car manufacturers today are Aston Martin, McLaren and Morgan (and the Morgan’s uses Honda engines).

        Maybe Boris the Clown will promise to buy everyone one of these cars with only a pittance of the fairy gold from Brexit?

  3. Laughing Eagle
    Dec 26, 2018 at 12:18 am

    Anyone who thinks diesels are a great engine for cars is illusioned. Its only good for 18 wheelers as the torque carries the payload. I owned a diesel in 1983 and from then on said I would never own one again. The oil gets grity as the diesel fuel does not completly burn and ends up in the oil. And then one must have a water filter separator to prevent water condensation from entering the diesel fuel in the tank. Water cannot enter a diesel engine. Diesels are an expensive maintanence vehicle and offer no advantages, especially since diesel fuel is more expensive than gasoline. If you think you can get 7500 miles between oil changes, think again, youn will destroy that engine fast.
    The Brexit exit rhetoric is all fears created by the globalist’s, just like they did with the second bailout of Greece with Yanis Varofaukis and reading his book “ Adults in the Room” explains the same tactics of promise, promise, delay, delay, until you wear out the remaining fews who want to do the right thing.

    • Jos Oskam
      Dec 26, 2018 at 3:41 am

      Ok, I am illusioned. My diesel does not need spark plugs, there is no catalytic converter with complex sensors and electronics, regular oil and filter changes are all it needs and the odometer now shows 300000 problem-free miles.
      And I am not the only one:
      https://www.carsdirect.com/car-buying/are-diesel-maintenance-costs-similar-to-gasoline-cars

    • Ravi Uppal
      Dec 26, 2018 at 8:01 am

      In which age are you living ? I work as courier driving 500 Km per day . I drove a Citreon berlingo for 7years . Doing regular service after 20,000 km . I lost my van when it had 800,000 km on the meter . The fault was mine as I did not change the belt kit at the required Km”s as recommended by the manufacturer . During the seven years my extra expense not counting regular service ,brake pads,tires was Euro 2000 . The van was doing 5lit/100 km . Diesel is king . Of course it is more polluting than petrol ,but then so are bovine animals ,mankind has a choice , pollute and die or don”t pollute and die (global dimming+economic collapse ) . Take your pick . We are bozo”s on the same bus .

    • Steve
      Dec 27, 2018 at 3:46 am

      It appears you know nothing about Diesel engines, everything you stated is wrong.

  4. Ian Benford
    Dec 26, 2018 at 1:53 am

    Passenger car demand fell by 8% across the EU in November, can that be solely due to Brexit? Are you seriously suggesting that a buyer standing in a car showroom takes politics into account when buying a car? You need to explain why car production in non EU countries is also falling. Personally I’d never touch a diesel car with a barge pole due to the upcoming clampdown on diesels. Furthermore I won’t replace my petrol cars just yet as further incentives may be introduced for electric cars. Brexit is the last thing I’d think about when buying a car.

    • Dec 26, 2018 at 1:56 am

      80% of the car production in the UK goes to exports, and the article makes it abundantly clear that the drop-off in the export markets, particularly in China, is largely responsible for the decline in production.

      Also note, the article is about PRODUCTION (manufacturing) of cars in the UK, and NOT about sales of cars in the UK.

      • Graham
        Dec 26, 2018 at 2:58 am

        If 80% of UK car production is exported and it takes 1,100 trucks per day bringing in the parts from the EU, does this not indicate the logistics of the madhouse?

        1,100 trucks per day, paying no road tax to pollute our air and damage the roads, PLUS another 600 trucks a day using UK roads to get from Ireland to Dover to catch ferries to the EU.

        Jaguar LandRover suffers because 85% of their production is diesel, and the UK Government says diesels are now bad and all petrol and diesel cars will be phased out by 2040 and the Greens want that reduced to 2030! The UK Government has increased taxes on diesel cars and some local authorities now charge extra to park a diesel car. The nett result is that diesel car second hand values have dropped dramatically so people do not have the money to do a px so new car sales have fallen.

        JLR have an additional problem. The build quality and reliability is not generally as good as their opposition, and they are very expensive for what you get. Today, you have to be the best to thrive, not just OK.

  5. ML
    Dec 26, 2018 at 3:30 am

    My previous car, Audi A3, was a diesel. When I got a new car, I should’ve like to have bought another diesel but was talked out of it by the salesman. I was told the engineering had changed and diesel would no longer be suitable for the short journeys I took. So I bought petrol. Shortly afterwards the fuel price differential widened and diesel higher price. Thinking about my friends, I cannot think of any who has bought a new car for years. Even my driver who clocks up a few hundr d thousand miles a year buys second-hand.

    Another factor is the method of financing. New cars in UK tend to be sold to consumers on a monhly equivalent payment basis so as to give the impression of more affordable. Tying up monthly outgoing is not a recipe for new car buying.

    UK sales falling to UK customers doesn’t fall in exports. That I suspect is to do with manufacturers overpricing and/or not making cars that are wanted.

  6. medialAxis
    Dec 26, 2018 at 4:43 am

    I’m lucky in that I’ve not needed to own a car for over 20 years, so I haven’t. I mean, why would you, unless you had to? From what I hear, we’re moving to a sharing economy, where we own less stuff. Not sure how that’ll impact that over hyped number called the GDP. But if it’s cheaper, or less hassle, not to own then why own? YMMV.

    • California Bob
      Dec 26, 2018 at 1:20 pm

      re: “I’m lucky in that I’ve not needed to own a car for over 20 years, so I haven’t. I mean, why would you, unless you had to?”

      OK, I’ll bite. I’m a ‘car guy.’ I like cars, and I like to drive (as fast as appropriate). I just bought a new Mustang GT, to replace my older Mustang GT, because it has a (relatively) large V8 engine, and I wanted to own one before they become extinct. I own two classic British sports cars as well, and with the passing of my father I acquired a couple older American classic cars and an old Chevy 2-ton truck. Most, besides my DD (‘daily driver’), don’t get driven much so contribute a relatively small amount of pollution (probably less than a couple cows; but, yeah, I eat meat too). I also like airplanes, though I haven’t flown myself anywhere in a few years. I like machines, especially ones that make the scenery go by (and computers, from which I made my living for over 30 years). I keep all my cars in top nick, and make a real effort to combine trips so as to limit non-recreational driving. I also limit my consumption of resources–water, electricity, whatever–as much as possible (wish there was an alternative to plastic, I hate that stuff).

      I understand your lack of need or want for a car, as to you it is just a means of transportation, or that gawdawful word ‘mobility;’ nothing more than an appliance on wheels. I also understand the days of the enthusiast may be numbered (but the number of enthusiast websites and TV shows somewhat belie that). But, I will continue to drive, maintain and enjoy my petrol–no diesels, I’ve always felt it was dirty compared to gasoline, it’s oily and it smells bad–vehicles until I’m no longer able, as will quite a few of us remaining enthusiasts.

      Did I answer your question?

      • medialAxis
        Dec 26, 2018 at 4:04 pm

        Yes. I agree, you’ve a good reason to own, you’re into motors and motoring. You enjoy them (plus you’ve the space to. I’m in the UK, there’s hardly room to park here, let alone drive!). But I suspect a lot of people own a car because they think they ought to. Most are parked 22 hrs a day, outside the house or place of work, the other 2 hrs spent driving between them.

        BTW, the best car I owned was a Riley Pathfinder. It had a RH gear lever, next to the driver’s door. I was far too young for it. Ended up somersaulting it! I was into cars in my youth, spending more time under them (or the bonnet, hood in the US, I think) than driving. I’m now likely too old to take up driving again, and have no desire to do so. On the plus side, the roads of the UK are safer without me.

        • California Bob
          Dec 26, 2018 at 10:22 pm

          Fair enough. I live in California–duh–with some of the best driving roads anywhere and close to many great roads in the American southwest and west. If I lived in a large city with crowded streets I’d have to park all my vehicles most of the time–and probably have to pay exorbitant storage fees–so I’d probably go car-less as well. I acknowledge I am fortunate.

          My Brit cars are a couple of Austin-Healeys; along with the Supermarine Spitfire some of the most beautiful machinery to come out of the UK. I only know a little bit about Rileys.

          I suspect you are a latent ‘gear head,’ if you had the room, the gas and the time to drive and work on cars you would be motoring too. My best to you.

  7. MC01
    Dec 26, 2018 at 5:34 am

    Car manufacturers have expanded enormously in Turkey: off the top of my head we have FCA, Ford, Renault and Toyota assembling cars and vans there, with over 90% of the production being exported, mostly to Europe and the CIS.
    Turkey is not part of the EU, yet I don’t hear the automotive crybabies bemoaning this fact, probably because due to the abysmal performances of the Turkish lira over the past couple of years the already low Turkish wages have been further depressed. Automotive assembly plant workers are paid about €450/month (this may vary as the lira zigzags lower), which is not a completely horrible wage by Turkish standards, but is still about half as much as corporate low-wage paradise Romania.

    And again, when Honda started importing into Europe SUV’s manufactured in Guanajuato and Jalisco (at last notice not part of the EU, but we let everybody in these days so that may change) their executives didn’t spend their days releasing interviews on how this would “disrupt” their business model and force parents to sell their children into slavery.

    I could really go on for hours, calling out every single one of these Brexit crybabies to show how far their love for the EU goes: in many cases just as far as generous subsidies go. See the factory Honda has in Southern Italy to take advantage of EU-sanctioned tax breaks for “economically underdeveloped areas”. Honda has long played a game of “tax breaks stay or we close the factory down” with both the EU and succeeding Italian governments, and has always won without too much effort.

    Just like Wall Street has been going a rather pathetic PR offensive for reasons we know fully well, the automotive crybabies have started threatening to hold their breath until they turn blue if they don’t get what they want, namely being saved from their own mistakes, the same mistakes they made in the run-up to the 2009 Financial Crisis, with the added “bonus” of having cut off the head of the goose which laid the golden eggs, namely saturating the Chinese market seven years before the worst case scenario.
    I’d say let’s see how they can hold their breath.

    • char
      Dec 26, 2018 at 9:45 am

      There are countries that are part of the EU and there are countries that are not part of the EU. And Turkey is something in between.

      The cost of assembling a car is about the same as moving a car from Mexico to Europe. Reason why Honda sells Mexican SUV’s in Europe isn’t so much cost as it is to little demand for those Honda SUV’s in Europe

      • MC01
        Dec 26, 2018 at 10:32 am

        No offense meant, but you should work with Honda like I did for a few years. You’d learn a lot of things, chief among which is how that company address demand issues.
        Let’s just say that Honda-sama and especially Fujisawa-sama would be rolling in their graves hadn’t they been both cremated.

        • char
          Dec 26, 2018 at 1:43 pm

          Honda is a small brand in Europe ,140000 a year, and the HR-V only sells 30k. Too little for a production line.

        • MC01
          Dec 27, 2018 at 2:13 am

          You appear unaware that Honda manufactured the first generation HRV in Japan (Saitama) and first to fourth generation CRV in the UK (Swindon). Both sites are active as of the time of this writing.

          But I went back and looked at some of your previous aposts and you always have all the answers and are always right so I’ll just humbly demand your pardon for even existing.

          Let’s just say that people like you are the reason why each time I want to write a shart piece for this website I have to overcome my first reaction which is “Why even bother?”.

        • HowNow
          Dec 27, 2018 at 7:11 am

          I’m glad you “bother”.

        • HMG
          Dec 27, 2018 at 1:24 pm

          Honda

          As an ex Honda motorcycle (1960-1990) and (1980-1990) car dealer I can confirm that for the last 60 years Honda have earned their place at the table with the big boys. Factories all over the world. Generators, outboards , lawn mowers, small executive jet planes. Diversification on a grand scale. The list is endless.

          But maintaining the momentum for a another decade may not be so easy. It was all built from the foundations of a clever small 50cc 4 stroke petrol engine. Small steps up to the Gold Wing m/c , Honda Legend, 300 HP outboards…….always bigger and better.

          The future now maybe to retrace their steps, go back to basics and start downsizing.
          Maybe all of us should consider doing this and at least pay lip service to saving the planet.

        • Kaz Augustin
          Dec 31, 2018 at 3:47 am

          We’re thinking of moving to motorbikes as our go-to transport for fun and trips away and renting a car if we need to shift more bodies. The space and money considerations make sense. Why buy a car for a 5% use-case?

    • Leser
      Dec 30, 2018 at 9:42 am

      Great point on Turkey’s performance in connection with not being a EU member. Compare that to Greece which shares many traits with Turkey, except of course its economic development. No carmaker would currently dream of building a factory in Greece.

  8. MD
    Dec 26, 2018 at 7:21 am

    Castle Bromwich…once the main location of the construction of the 100% British Spitfire aircraft.

    Now the location of an Indian car company, with a British name.

    How times change.

    • Maximus Minimus
      Dec 26, 2018 at 1:52 pm

      Jaguar is building a new maga-factory in Slovakia even as we speak, into a shrinking market. Apart from lower wages, it came to be located there thanks to more than generous government subsidies. Government subsidies which both the EU, and WTO failed to ban, will come home to bite. When this market pops, Castle Bromwich will go back to making fighter aircraft.

  9. Naresh
    Dec 26, 2018 at 9:36 am

    Brexit may be a scapegoat world will be experiencing the next grest depression even the unthinkable America cannot afford her armies anymore …the fatboy in the White House makes no decisions .on anything anyways.. 2019 will be a very telling year

    • Ravi Uppal
      Dec 27, 2018 at 7:41 am

      2019 will be not a ^telling year^ , it will be the year when the wheels come off our industrial civilization . This will not be a collapse at the initial stages
      but an unraveling ,one brick at a time . 2018 ,the year of chaos — 2019 the year of mayhem . Welcome to interesting but dangerous time . Grab some popcorn and watch the mayhem . My best guess when will the unraveling start — the second quarter of 2019 .

      • HMG
        Dec 27, 2018 at 1:32 pm

        My guess too.

        And not only the industrial civilisation but rather the warped complex financial ‘civilisation’ that has evolved over the last 50 years, either by default or careful planning by the ‘powers that be’, or a subtle combination of the two.

  10. MB732
    Dec 26, 2018 at 10:09 am

    Commendable that UK can export 80% of its production…But sustainable? What competitive advantages could they possibly have long term?

    And Jaguar Land Rover is probably the vehicular poster child for the wealth effect. Short ostentatious white elephants.

    Here in USA a popular TV ad this season was GMC Trucks where guy surprises wife with his and hers $50k each Pickup and SUV for Christmas. Doubt we’ll be seeing ads like that one next year.

    • California Bob
      Dec 26, 2018 at 10:36 pm

      re: “Here in USA a popular TV ad this season was GMC Trucks where guy surprises wife …”

      Popular? I doubt; ubiquitous, yes. The animosity for GM advertising–especially the insipid ‘real people’ Chevy ads–is evident on dozens of auto enthusiasts’s sites (and elsewhere; they’ve even been parodied by an insurance company). This particular ad strikes me for its cluelessness: A couple of gorgeous millennials, living in a multi-million dollar showcase house, and one of them can apparently buy–well, lease probably–a couple of $50K+ vehicles with his pocket change? How many people like that are there?

  11. doctormike
    Dec 26, 2018 at 11:14 am

    I disagree with the premise that being in the Eu was good for the UK car industry. Joining the EU destroyed the UK car industry.
    Countries race to the bottom with worker conditions,low taxes and other financial incentives for firms. Then the jobs go there, because there are no tariffs. The one defence is having a different exchange rate.
    Sales in the uk have gone way down because of new taxes on cars. That decreases the reason for firms to be here. Sales in the eu are down because of green taxes and the declining economy.

    Hopefully when tariffs go up more firms will need to relocate here, including parts. Firms just serving the UK, rather than the EU. Firms with big presences already here, like nissan, will keep a small factory to serve the large uk market. The counterargument is that manufacturing costs go up. But the government could tax us less, paid for by tariffs and worker salaries.

    There is no economic gain from being in the EU. Even worse if the country also has the Euro. Even Paul Krugman thinks so!

    • nick kelly
      Dec 26, 2018 at 5:46 pm

      ‘Joining the EU destroyed the UK car industry.’

      Now that IS different. Every historian of the gruesome British Leyland 70’s thinks the unions destroyed BL, with help from management.
      Can you imagine a plant where shop stewards hired and fired?

      During one year in the twilight period. one large Austin plant only managed two weeks of uninterrupted production. UK Auto workers being on strike was a cliche.

      BY comparison, in 1975, competitor VW had its first strike. It lasted for 48 hours.

      Today there is no British car industry but there is a large car industry in Britain.
      In France, far less hospitable to foreigners, there is a French car industry but it is smaller than the one in Britain.

  12. Caliban
    Dec 26, 2018 at 1:07 pm

    This is off topic as it’s US Centric. I have no idea how widespread the discounting or if it’s systemic. I just got this in an email from a Ford dealer that I’ve dealt with:

    2018 Ford F-150: Starting price of $22,750 for 2018 Ford F-150 Regular Cab. Get savings up to $12,500 on a Regular Cab, SuperCab, or SuperCrew® trucks, with approved credit. Some exclusions may apply. Valid for in-stock vehicle only. Not all will qualify. See dealer for complete details. Offer expires 1/2/2019.

    2019 Ford F-250: Get savings up to $12,500 on SuperDuty trucks, with approved credit. Some exclusions may apply. Valid for in-stock vehicle only. Not all will qualify. See dealer for complete details. Offer expires 1/2/2019.

    These are Ford’s cash cows. Maybe it’s just a temporary or regional overstock problem. Ha ha ha.

    • California Bob
      Dec 26, 2018 at 10:50 pm

      Those are bone-stock loss leaders, and probably 2018 model year (the 2019s have been out for a while). They’ll have one on the lot–just to be technically legal–if it didn’t ‘sell right before you came in.’ If you go in for one of those, you may well come out in a $40K+ Lariat or other premium trim truck. Try it.

      Department stores aren’t the only ones cleaning out stock at EOY.

      • nick kelly
        Dec 26, 2018 at 11:41 pm

        As many have found, the base model is ‘glued to the floor’
        It can take a serious threat in writing of legal action to force it to be ACTUALLY supplied at the base price.
        Hence the catchall phrase: ‘beginning at ….”

  13. Steve clayton
    Dec 26, 2018 at 6:39 pm

    The only reason the car production industry in the UK didn’t suffer serious decline has been China since 2010 volumes went through the roof. Surprised it’s taken for the negative effect to start.

  14. Atu
    Dec 26, 2018 at 9:27 pm

    Good grief. I really cannot believe that society is so finely tuned, or should that be to the hilt, that it enters crisis at the prospect of less car sales. It is like listening to FCO advice designed for touristy expats who fuss over their rights abroad. It is truly absolutely pathetic, almost hilarious. Why are all these people living under some bureaucratic umbrella in countries where they think the locals will turn round and bite them if they don’t wave the EU banner ? People used to travel and live all over the world without this kind of “integration” , and without trouble, but no – now it is all a question of entitlement and the rest be damned.

    The west has become stupid. We live in times of absolute surplus and all we can do is complain and officially mismanage ourselves towards a relative poverty. The sooner some accountability returns the better.

    • California Bob
      Dec 26, 2018 at 10:53 pm

      Auto sales have traditionally been considered a leading indicator of economic robustness. That is all.

  15. Steve
    Dec 27, 2018 at 3:44 am

    You must have missed the part where the BoE cut off the crazy credit market, there were newer cars round the council estate than there were outside millionaires row. At least with short leases it could unwind easily.

    Now we have a falling market where everyone is told they should buy electric, and not diesel, when electric cars are overprices and underspecced. It’s no wonder people are holding back.

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