They’re already under pressure from the deteriorating market.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Honda, the fourth largest car producer in the UK, has unveiled plans to halt its UK production for the first six days of April in order to stockpile parts in the immediate aftermath of Britain’s exit from the EU. The announcement came on Thursday, the same day that UK Premier Theresa May met her Japanese counterpart Japanese Prime Minister Shinzo Abe to discuss Brexit-related issues, and reads as follows:
“Honda of the UK Manufacturing Ltd has been assessing how best to prepare for any disruption caused by logistics and border issues following the UK leaving the EU on 29 March 2019.
“To ensure Honda is well paced to adjust to all possible outcomes, we are planing six non-production days in April 2019.
“This is to facilitate production recovery activity following any delays at borders on parts. These contingency provisions have been put in place to best mitigate the risk of disruption to production operations at the Swindon factory.”
Honda is not alone. BMW, the third largest car manufacturer in the UK, has announced plans to shut down its site in Cowley, Oxford, for maintenance during the whole month of April, in order to minimize the disruption a no-deal Brexit could cause to its production and supply chain.
The fifth largest manufacturer, Toyota, is also considering temporarily ceasing production in the event of supply-chain disruption. “If Britain crashes out of the EU at the end of March, we will see production stops in our factory,” said Marvin Cooke, the managing director of the company’s plant in Burnaston. Asked how long those stoppages could last, he said it was impossible to tell. “It could be hours, days, weeks – even months.”
British luxury automaker Aston Martin also unveiled plans this week to navigate a disorderly Brexit, including signing deals with supplier DHL to allow for the use of ports other than Dover which, as Britain’s busiest harbor, is most likely to be disrupted by customs delays. The firm is also considering the possibility of making air freight deliveries.
“I don’t think we’ve been in a position in the last two years where we’ve been further apart from understanding where we’re going to end up,” said the company’s CEO Andy Palmer.
That global automakers are planning for disruption at the UK border should not come as a great surprise, particularly at this late stage in proceedings. Their sprawling, fine tuned supply chains, reliant on “just-in-time” and “just-in-sequence” delivery and production systems, are as fragile as they are efficient. While any post-Brexit disruption may last little more than a week, at least until the new system falls into place (assuming there is one), it’s the timing of the disruption that could be the problem, coming on the heels of month after month of deteriorating production and sales.
Jaguar Land Rover, the UK’s biggest vehicle manufacturer, has just announced 4,500 job cuts globally, 4,000 of which are in the UK, following two consecutive quarterly losses. The company — which is owned by the Indian behemoth Tata — has repeatedly warned of the consequences of a no-deal Brexit; this week’s raft of job losses are more a result of structural issues facing the global automotive industry than any pre-Brexit angst.
Like many car producers, JLR is reeling from the blow-back of shrinking sales in China, which until very recently was a major growth industry for the group, accounting for around a quarter of global demand. And with nine out of ten of its cars powered by diesel engines, JLR is also particularly exposed to plunging consumer demand for diesel vehicles.
In the UK alone total diesel car sales collapsed 29.6% in 2018, after having already plunged 17.1% in 2017. Since their peak in 2016, diesels sales have dropped by a staggering 42%, from 1.29 million to just 750,165.
Collapsing sales of diesel cars, both in the UK and on the continent, is battering UK car production, which slumped by 19.6% in November compared to the same month of 2017. With around 30,000 fewer cars produced, it was the biggest year-on-year fall of any November since the financial crisis of 2008 and the sixth consecutive month of falling production, according to the industry group, the Society of Motor Manufacturers and Traders (SMMT).
None of these problems are unique to the UK. Car registrations have hit a brick wall in China, the world’s largest market, as part of a broad, gathering economic slowdown. In the world’s second largest market, the US, sales peaked over two years ago and have ticked down since. Even in Germany they have begun to slide in recent months. After years of uninterrupted growth, global demand for new cars has begun to sputter. Now, with Brexit fast approaching and still no sign of a viable get-out clause, it’s perhaps no wonder car manufacturers are worried. By Don Quijones.
This is getting serious. Read… Carmageddon in the UK: Auto Sales Plunge 12% in 2 Years, Diesels in Death Spiral. Consumers, Businesses, Fleets Cut Back
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This will make it difficult to make plan for the next few quarters, but you see, this is why one diversifies into other industries and other countries. If worse comes to worse we can always short a few of the more distant family retainers and maybe close up one or two estates until things blow over. Stiff upper lip, and all that.
What does Carlos Ghosn think ?
The UK car market will have to do a bit of rebalancing.
UK manufactured cars will have to replace the prestige EU imports from Germany. Good news for Nissan, Mini and Honda probably. Bad for VW, Merc, Audi, Citroen……..
Not once a decade has a new car customer ever asked at one of my car showrooms in which Country their intended purchase was made. Maybe it’s about time UK Companies, and dare I say it Motability, take this into consideration.
No doubt the UK new car market will shrink in 2019 but that will happen despite Brexit, not because of.
The UK economy is certainly deteriorating fast, regardless of any possible impact of Brexit.
Hi Cynic, no it’s not the UK doing fine. Most businesses I deal with have never been so busy. The auto industry is due its 10 year correction let it happen. Another Brexit scare story.
the mm’s created enough doom and gloom to run up everything they need to dump…..
I’m in the industry and the correction you state is overdue and welcome to clear out the fluff……
Peak car sales worldwide are now on downslope, the 6th innovation wave is not auto….
The view from the outside is that May is making much ado about nothing in order to get a do over on the vote. Like her US counterpart she demagogues and the media eats it up and like the border wall it seems Brexit redo is going nowhere, a reverse hostage taking, like the sheriff in Blazing Saddles.
Agreed Ambrose. Trade is trade. Not quite sure what game May is playing but we want out. Hopefully she goes this week and we get somebody who believes in the UK. Regards Steve UK.
I live 50:50 UK : Thailand and bought a Toyota, the first Asian car I have ever bought and I would say that it is of comparable build. The thing I really like about it is how simple it looks to work on under the bonnet (hood) and understand that the spare parts are cheap compared to the German cars and when you look at the reliability tables, all the Jap manufacturers take the top of the tables. I just hope the UK citizens can see this and opt for UK built Japanese cars instead of German manufacturers.
i grew up with gm and ford products. as an adult, i’ve driven mostly swedish and german products. that said when it comes to reliability, toyota products, no matter where they build them, are by far the best.
Didn’t you buy a truck in Thailand. A product that is not really buy-able in the UK?
Was just reading there are over 30 million cars on the road in the UK, increasing by a half million a year, with gridlock warned of eventually, with many just abandoned for councils to collect etc. … cars beyond functional don’t really put food on the table either. In short I think there are enough cars in the UK to last another ten years without real shortage and without one new one being built.
What would everyone do though, what would they be working for, if it weren’t to buy the latest model ?
Probably would just feel lost and denied without being fed objectives.
There will not be a Brexit, I do not see how people think there will be one…
Central banks pulling the plug on current business cycle, by the time they vote again in April-May, they will be in the middle of a deep recession and stay in EU vote will win
It is literally impossible they do a no deal Brexit with time remaining on the scheduled leave of March, they will re-vote for 2nd referendum, they have been prepping the people for a few weeks with media pushing the alternative re-voting… For what it’s worth, UK will be much better off Economically if it stays in EU
SAYS YOU
Other may disagree.
17m voted Leave….16m Remain (approx. figures I know)
Conservatives then install another Remain PM and Chancellor. Already have a Conservative Remain Governor of BoE.
May is right about one thing though. Democracy is at stake.
This dead end deal cannot be forced through by Blackmail.
Who is ‘in charge’ here ? The people, Parliament, John Berkow?
Isn’t Democracy by definition Populism? Hitler could have been initially referred to as a Populist. Weren’t Obama, Roosevelt, Kennedy also Populists ? Or is it just those politicians judged by those in already in power who decide who is a Populist and who is Democratically legitimate ? Is it really a fair criticism of Nigel Farage that he, because is a Popularist, is underserving of power and influence in the negotiations that he more than anyone had argued for a decade. Should not Nigel and selected Leave advocates from the opposition Parties have been invited to join May’s negotiating team rather than biased Civil Servants.
As Mr Chamberlain learnt to his cost, compromise is not always the best policy. The PM’s judgement is sometimes critical in a crisis and Mrs May’s has proved to be a total failure from the beginning, even if she manages to force through the 585 page disaster deal.
Her very first decision to delay the implementation of Article 50 signalled to the EU her weakness. All her problems can be traced back to her first significant weak dithering decision.
The whole car sales and manufacturing issue is just a small segment of the overall Brexit process and just further highlights this current Government’s bad judgement.
Neither In or Out supporters can totally trust what a Japanese Prime Minister Abe thinks, what a Canadian Bank Governor thinks, or what highly paid senior UK Company Directors think. Democracy ultimately means it is what the UK voters think in a free and fair election or referendum that counts.
Voters now know many more ‘facts’ that they knew two years ago so, as long as it’s the identical question again, not a concocted variation to suit particular factions, I see no reason not to give UK voters a chance to confirm or reverse the 2016 Referendum result. Particularly if it prevents Parliamentary Civil war and the unproven claim that anything other than May’s deal or Remain will be chaos.
That’s certainly a very confident proclamation. I guess we’ll see whether your certainty is misplaced in a few weeks’ time!
All I would say is we’ve been hearing this for a long time now, and I’ve yet to see any evidence whatsoever that the UK won’t be leaving the EU at the end of March.
Have you..?
There will not be a Brexit, I do not see how people think there will be one…
Huh!? The UK government and Labour made legislation that makes Brexit the default outcome. If they now want another outcome, they have to legislate and the EU has to approve of it because the UK is still in the EU.
What has been said is that Cancellation of A.50 is possible but the UK parliament has to legislate to do it (meaningful vote). So far parliament are still in deep discussion on the various trimming options of the unicorns they shall have once they have sneered enough at everyone.
Thus A.50 reversal by a dysfunctional parliament is unlikely to happen
The 2’nd referendum is a unicorn idea peddled by parliamentarians who wants to reverse A.50 but are trying to avoid the responsibility for doing it.
Bruxelles are annoyed with the UK and will exact revenge by making sure that the UK Parliament cannot slime their way out of their own mess via a 2’nd referendum. Even if ‘Bruxelles’ was somehow sold on the idea, then Someone out of the 25 signatories to May’s exit deal are bound to veto changes and extensions to the A.50 process so “No Brexit” via the EU is unlikely also.
People catastrophizing about “no deal”. Seems like no one remembers *real* problems like the Battle of Britain in WWII. @Atu is right. There are far too many cars already: everywhere (not just UK). The real issue is autonomous control of borders, local laws & economy, a right which every country should have. The “globalist elites” are hyping up this whole “no deal” thing because they are afraid of losing control. If Britain managed to beat the Nazis in WWII, then it surely can weather a (non Nazi) “no deal”.
Agree. Britain would have been better off going the “no deal” route from the get go. By now, trade agreements would have been in place for more than a year with more reliable partners than the EU authoritarians. Two years of uncertainty bought nothing.
It is very difficult to negotiated with somebody that doesn’t know what they want so please don’t blame the EU for this. It is British indecisiveness that made the negotiations so unproductive.
“This is getting serious.”
No wonder you have “if it gets serious, you should lie” Juncker is on the job of Brexit.
On a serious note, I find the fear mongering on account of Brexit to be nauseating. Don’t get me wrong. There may be serious consequences. But then some stands that you take your life or life of the nation may have serious consequences (e.g. World War I, World War II, Atom Bombs, Iraq war) that involve loss of lives. This cannot be put into that bracket. So if countries can come out of such events, then the UK also will get over this with time.
I am ready to bet that after Brexit, even if there were serious consequences (likely), British people WILL find a way out of the rubble.
The self-serving politicians, bankers and central bankers like Carney need not make horror stories out of it. Let people find a way out of the mess if any. Who they hell does this trio think they are-gods to safeguard us? Knowing how slimy this trio is and whose interests they safeguard, I for one would NOT depend on these guys either to tell the truth or to safeguard me! I am ready to fend for myself and face the consequences too unlike the cry-babies at wall street who run to the Fed (with its money spigot) at every instance!
Agree KPL. Better for a country to initially struggle after Brexit, but be in control of your own destiny, then be a slave to Brussels. People have always found a way through difficulties. Its just some Politicians, their mates and Bankers worried that democracy may reigh supreme.
They are certainly a most slimy lot, from whom one would not care to buy even dog insurance: however, in a globalised, industrialised, and now increasingly resource-depleted world, no country is truly in charge of its ‘destiny’.
It’s no more than cheap pseudo-patriotic rhetoric (quite as cheap as pro-EU propaganda, and scare-mongering, I would agree).
The Romans apparently believed that their destiny was assured, as they venerated the gods and were splendid people.
Physics and reality told against them and Rome turned into a village and cattle market for centuries, whatever their fantasies.
Rome turned into a village way after they stopped venerating the gods. That is one of the important reasons the Roman empire collapsed.
If Britain does end up with a no-deal exit in March, I wonder how quick they would be to make special trade arrangements with the US?
It’s no secret that Trump supports Britain on this one and would enjoy a poke at the EU. He would also be able to sell it as a political victory to his base.
I think such an agreement would be a lot more divisive in the UK than here as many would fear it would complicate trade talks with the EU.
my thoughts exactly. the brits must have known that the eu would never be reasonable about this divorce. the uk should have spent their efforts setting up trade deals with everybody else.
also, look at the bs the eu is pulling on the irish border. the uk should have just announced that there will be no restrictions entering northern ireland and for practical purposes customs will be done on entry to britain. the eu can do whatever it wants entering ireland from the north.
The UK has a very peculiar sense of “reasonable”. IMHO the EU has been to nice to the UK. They got more than what was fair.
ps. What you propose sounds like a boarder in the Irish Sea.
@char i think the eu negotiated in their own interest but may seemed to be negotiating with herself. it reminds me of president obama who promised americans health care and actually delivered a deal that was worse than the already horrible system that it replaced. this happened because he came to the table and offered the insurance companies a compromised solution as a starting point for negotiations. may did the same thing. she should have gone to the eu and said, if you want us to pay the 39b euro bill, then here’s what we need as a trade relationship going forward. otherwise, we aren’t paying.
and yes, i am proposing a border in the irish sea. the eu can, of course, do what they want for goods and people moving north to south but the brits should set up a special economic zone without borders from south to north. it’s not that crazy. think about what the chinese did in hong kong. one country, two systems.
The border in the Irish Sea is the preferred solution of the EU. It is something the UK didn’t want.
The UK never said what they wanted. That was the whole trouble with the negotiations.
ps. Do you know how the maffia started out? That is the big reason why we don’t want smuggling on the Irish island
well, as an american, i admit i’m ignorant of the historical details of the thing. there was never really any possibility of negotiation it just seems obvious to me that the british need to get as far away from eu membership as possible and renegotiate everything after the break. it’s just a matter of time until the whole european project falls apart.
KPL
I think we are on the same wavelength.
The other option is global plutocracy…
BREXIT will happen. The UK gov’t has to allow it or be seen as “undemocratic”. Remember there was 6% difference in the leave/stay vote; in no way is that a “slim” margin.
The Gov’t has no one to blame for this mess but themselves. They gamed their positions based on personal political gain instead of working for the country as a whole and failed miserably. Then they compounded the error by the same methods instead of working on a solution.
There is no time for another vote. There’s no time to go looking for another “plan”. They need to get their collective shit together and work out what’s going to happen in than two months.
The entire world has been watching this mess and wondering exactly what happened to this country that they cannot find a single leader in the whole political class.
England is quickly closing in on failed nation status.
Sorry to have to repeat myself but ‘Her Deal’ is not IMO ‘Leave’.
The Conservative Party had one last chance to move back from PM’s plan when the 48 letters went in. But she out smarted her opponents by having the Vote within 24 hours thereby giving dissenting MP’s no time to discuss the core issues and try and quickly find a new PM.
The Conservative Party, not Mrs May, are responsible for this dead end we now find ourselves in. The price they will now have to pay is a Labour Party leader in No10.
Ford anounced they’re going to lay off thousands of workers in Europe and did threaten in case of a no agreement Brexit, they’ll close factories in the UK.
Interesting that GM didn’t manage to turn Opel into a profit making operation. Now 2 years after they did sell Opel to French PSA, Opel is profitable. I do not know the situation of Vauxhall ( decal enchanced Opels ) in the UK.
Yeah well what wealthy individuals and corporations threaten to do if this, that or the other and what they actually end up doing are two different things entirely.
The privileged using empty threats to get handouts whilst wealth inequality grows, and austerity is imposed, is par for the course, and is one of the behaviors which have caused the discontent that leads to people thinking why not ‘shake things up’ and vote for things like Brexit…
Ford are closing down all car production, and concentrating on trucks and SUVs. Those plants are closing anyway.
Only in North America. Ford will keep making cars in the rest of the World
Pleading ignorance here, but what is a “no-deal Brexit” vs. just “Brexit”?
Deal is that they are out with a way to good deal for them No-deal is when they want even more. Deal makes it hard for us to stop UK imports without the sharing of cost for the Union or freedom of movement rights. The Backstop should have only included Northern Ireland but includes the whole of the UK but bad negotiating by the EU ended up with this compromise
char
I don’t understand a word you are saying.
Can you make your point a bit clearer please ?
OK here goes.
Brexit is now generally accepted to mean May’s 585 page withdrawal agreement. A kind of agreement to try and get a subsequent agreement by using ‘best endeavours’ to reach a real defined agreement in due course. May’s has an added complication of an Irish Backstop which is too complicated to explain in a few sentences but is not really the core problem, just an added complication.
‘No deal’ Brexit means UK starts negotiations after 29th March with a belief that if it comes to the crunch we can, as we did in 1939, stand on our own two feet, even if the EU are initially determined to ‘stitch us up’. Worse way, starting from a WTO base, we try and do individual deals with USA, Canada , Australia, New Zealand, Jamaica, India…… giving mutual benefits to both parties.
Even, God forbid, should the EU then decide either before 29th or after, to approach us we might even be tempted to have a mutually beneficial deal with them so their German, French and Italian cars can be sold here at less than the default WTO tariff rates.
And it would seem the UK would then have £39 billion up their sleeve to cushion the initial pain that would undoubtedly occur in the short term.
Our beloved Chancellor and BoE Governor do not mention this remote possibility because the average UK voter could not possibly understand such a complex conundrum.
Compris ?
With a no-deal there wont be negotiations for a very long time. (outside of deals for emergency, real ones not just good for business). UK-EU trade will than be like that between US and EU. Inter EU trade is more like trade between US state (sometimes even easier) so it will make trade much, much harder.
ps 39 billion is 600 per person. Not a lot of money.
£39 billion, not a lot of money !
Not to you maybe but quite a lot for me.
Look really it’s very very simple.
You’re driving down the road in your Eu Class Mercedes and you approach an intersection (Carrefour I think Macron would call it).
You have to turn Left ……………………..Leave
continue Down The Middle……………..Theresa May Deal
Or turn Right………………………………….Remain.
What’s the problem ?
600 000 pound is also a lot of money for me but it is a penny per Brit. Seen from the British economy and over 15 years than no, 39 billion is not a lot of money.
HMG
Except there is a road block on the Left and diversion signs to take the Right turn.
The problems with dividing anything by 60 million inhabitants is firstly there are only about 20 million shoulders that can repay anything.
Secondly the £39billion is not added to zero, there iare already a few trillion of Government debt and unfounded Pension liabilities, PFI scheme payments outstanding etc.etc.
Just keep adding small amounts and before you know it you get to the straw that breaks the camels back.
Unfortunately, real prosperity in the UK is deteriorating so fast that one cannot really talk about having funds ‘up one’s sleeve’. It is all dissolving.
Brexit is an unnecessary distraction from his hard reality.
Voting for Brexit was buying ‘a pig in a poke’: of course, there is some kind of a pig in the bag, but not as good as in a more transparent transaction……
From a car production point of view in the UK, most of the components are imported from the EU. If there’s a No Deal European component companies will suffer probably more than the UK car industry. Due to Merkel controlling the EU tobe honest I wouldn’t buy German or French cars at the moment anyway.
Officially there are now two options open to Britain
1) Remain (May’s deal)
and
2) Remain (forget the whole thing)
…and that’s your ‘democracy’ right there/
I disagree.
Remain should not be on the table.
It was rejected in 2016.
If ‘her deal’ is rejected tomorrow by the 650 MP’s then that should be off the table
So why do you think No-deal. Hard Brexit should be rejected ?
Please explain
HMG,
You are correct that “Remain should not be on the table”.
As the UK citizens voted Brexit (out of the EC) the choice should be “Leave with Theresa May Deal” or Leave with No Deal (WTO Terms).
But who the hell do you and the citizens of the UK think you are?
The government has decided that we are going to Remain in the EC.
I have just had a quick read through some of the 585 pages.
Not possible to study in depth but most of the nitty gritty is in the first 385 pages . After that there are lists of EU laws referred to in the first 385.
Some of the main points are:
All payments to the EU have to be in Euro’s. Many pages refer to pensions for all and sundry, even accruing liability for the transition period. And beyond. There is a supplemental 12 payments of 300 million Euros and commitments to buy back Nuclear equipment at Sellafield and other sites.
A myriad of complex liabilities wrapped in legal verbiage. They impose obligations to pay for the assessment of the many liabilities as well as the liabilities themselves. These which could come to hundreds of millions.
It would be a fair assumption that the €39 billion could be a serious underestimate. Significantly there does not appear to be any cap on the figure. In fact no figure is actually mentioned in the agreement.
We also have to keep paying the usual charges during the transition.
It’s a bit like asking someone to dig their own grave before shooting them.
It will be a lawyers paradise and guarantee our civil servants and theirs at least five years of work or longer, all at our expense. No wonder our civil service have agreed to such a complex and one sided agreement.
If it were a business deal, Pres Trump, Lord Sugar and any sensible businessman with half a brain would run a mile, or at least a kilometre.
To sign this would be an unforgivable move that Mrs May will soon after signing be able put on the shoulders of the next Prime Minister.
Thereby she will shrewdly manage to transfer responsibility for the worse deal in the history of our country onto someone else.
Let us pray that tomorrow enough Conservative MP’s put their Country before their careers.
My final comment before this evenings vote, thank you all for reading my Brexit remarks over the last few days, even if you do not agree with them :
I am reminded of a very relevant comment made by a very famous Englishman, the most famous ever one could argue.
” I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma…But perhaps there is a key ”
October 1939.
Hard Brexit = Jumping out of a plane without a parachute.
It would allow Europe to play hardball with the City, British tax havens, airlines, Cypress etc.
Europe has also to many car factories. Guess in which country they will be closed(this without EU pressure)
Hi Char, is it Germany, Spain or France? I’d say France with the economy going through the floor, Gilles Jaune going on and heavily unionised.
Yes chat, there’s quite a long section, several pages, about Cyprus in particular. and the division of Cyprus and the UK’s ongoing commitment to try and keep Cyprus aligned in the format the EU have decided for them.
The ridiculous details, unlimited commitments required of the UK and the EU’s legally binding ability to enforce those commitments make this agreement a financial burden that will IMO be a painful financial cost for a decade to come.
Mr Barnier has done an amazing job, a massive stitch up is what I call it.
It’s time for the our ex-Brexit Secretaries to speak their mind before today’s vote. In a crisis such as this Loyalty to The Country comes before locality to The Party.
…its called sarcasm.
No Deal was already voted for.
..end of.
(IF you live in a democracy….)
May’s deal scuppered then , and rightly so.
Even money a hard deal Brexit after all ?
As Mr Farage might say to the EU tonight, except he’s already said it once before in 2016.
“You’re not laughing now are you”