Abstract On July 13, Teresa May, the new leader of the British Conservative Party, took over Cameron as the British Prime Minister and entered the 10th Downing Street. This is another female prime minister after the referendum after the British referendum decided to leave the European Union. Teresa May said that in the load...
On July 13, Teresa May, the new leader of the British Conservative Party, took over Cameron as the British Prime Minister and entered the 10th Downing Street. This is another female prime minister after the referendum after the British referendum decided to leave the European Union. Teresa May said that after she became prime minister, she will start negotiations with the EU to leave the UK and seek the best interests for the UK. Analysts generally believe that Brexit will bring a huge shock to the global automotive industry. They predict that Brexit is likely to lead to a decline in sales and cost of automakers in the UK and throughout the EU. As Europe's second-largest auto market, the UK has cut off long-term ties with the European Union, which is the region with the largest local car sales in the UK. "British retreat to the 'big ship' that has been faltering has added 'wind and wave'," said Elinhorst, an analyst at consulting firm Evercore ISI. So, how will the global auto industry face the Brexit? Our reporter selected ten key issues and hoped to find the answer.
How will the interests of global automakers and component suppliers be affected?
Analysts predict that both automakers and component suppliers will be hit hard. Evercore ISI has lowered its earnings per share forecast for German, French and US automakers by 8.9%, and global component suppliers' earnings per share forecast by 3%. JPMorgan Chase predicts that after the Brexit, the yen exchange rate against the euro will rise, which will cause Japanese automakers' operating profit to fall by 15%. The agency also predicts that among the automakers exporting to the UK, Mitsubishi and Mazda will be the hardest hit, followed by Toyota.
Many institutions also predict that the exchange rate of the British pound against the euro will fall, and Ford and Volkswagen will face the greatest risks as the most automakers exporting cars to the UK, and the French automaker PSA Group will also be affected. After the news of Brexit broke out in the UK, the yen will appreciate, and automakers exporting cars from Japan will also be affected. After the Brexit, if the EU imposes tariffs on cars made in the UK, then automakers are likely to transfer capacity elsewhere. Among them, GM's factory in Ellesmere Port, England, is the most risky. The plant mainly produces Opel Astra, which imports the most parts from outside the UK.
If the Brexit leads to the disintegration of the European Union, what will happen to the global auto industry?
This is unlikely to happen, and the EU should continue to go on. Royal Bank of Canada said: "But if the EU breaks down one day, the entire automotive supply chain will be in chaos, as the borders of various countries will resume. Automakers and component suppliers may need to spend a lot of time. Let the supply chain return to a lower cost level.†Royal Bank of Canada also pointed out that from the current point of view, the EU is facing many problems and the risk of disintegration is further increased. If countries return to their original currency, then the German mark will continue to be strong, making the country's automobile export competitiveness greatly reduced, which will also affect US suppliers.
How will the large auto dealer group be affected? For example, the American Penske Automotive Group and the UK Group 1 Automotive.
Su Robinson, head of the British Concessionaires Association (NFDA), said: "The biggest problem for car dealers is that the uncertainty is greatly increased." This uncertainty means that if the UK really cuts off with the EU The link, then the contract of the pan-European car dealers will go. "On this issue, we consulted many lawyers' opinions and suggestions. However, all legal professionals have said that at this moment, everything is just a simple guess," Robinson said. Many European automakers are concerned that the retail price of autos will rise in the future, leading to a decline in sales.
GM and Ford, will the two American automakers' European recovery roads become bumpy?
In the opinion of the analyst, the answer is almost certain. The UK is the largest market for GM and Ford in Europe. Ford and GM's Vauxhall are the two best-selling brands in the UK, and Ford's models are very popular among consumers in the UK. Ford European Chief Financial Officer Lyle Waters has said that the UK is vital to Ford's profitability in Europe. In the first quarter of this year, Ford's European market achieved profitability, but the weakness of the pound made the company's profits affected, because Ford's cars sold in the UK were imported from other European countries.
GM is better than Ford, which has two factories in the UK that produce cars and vans. At the end of June this year, GM’s chief economist Mustafa Mohatairen said that Brexit may have a positive impact on US car sales, which means that the possibility of a US interest rate hike is reduced, and the country’s auto industry credit will remain Low interest rates. On the whole, Brexit is unwilling to see both GM and Ford. The two car companies have been losing money in the European market for many years, making it harder to achieve profitability in highly competitive markets. “We have to reduce the sales expectations of the two car companies in Europe, and Ford and Vauxhall may be the most affected,†said Ian Fletcher, principal analyst at IHS Automotive.
How will global component suppliers be affected?
At present, the impact should be small. Detroit's suburban law firm Brooks Wilkinschae & Teke is the legal representative of more than 150 car dealers around the world. The company's lawyer Dan Xia said that Brexit will only affect a few customers of the company. “Actually, the size of the UK car market is not large, far less than China and Mexico. From this point of view, the impact of Brexit is not large. But for those car manufacturers in Europe, the Brexit is a major event. If the new trade agreement between the UK and the EU is similar to the current one, then there is nothing. The question now is, what kind of agreement will be reached, no one knows. Before we figure out what kind of agreement between the UK and the EU, we I don't know what impact it will bring," Dan Xia said.
How will the UK automotive industry develop in the future? Will a car company leave?
At present, no car company has indicated that it will withdraw from the European market. Gary Rees, an honorary professor of motor vehicle economics at Cardiff University's School of Business in the UK, said that among the factories in the UK, the most likely to close the door is the GM Ellesmere Port factory in Cheshire, England. The factory produces the Astra miniature hatchback and wagon. Rees pointed out that the car localization production level in Ellesmere Port is less than 25%. Compared with the automobile factories where most of the parts are from the UK, the low level of localization makes the factory less likely to receive government support. .
Will the UK car retail price rise?
At present, the French car manufacturer PSA Group said that the Brexit may mean that the company has to increase the price of cars sold in the UK, and the decline in the exchange rate of the British pound to the euro has increased the cost of automakers. Due to the devaluation of the British pound after the UK exited the EU, many French automakers are considering adjusting the price of new cars in the UK market to reduce economic losses. Reno's chief financial officer Delbos said: "After the company's high-level discussion, Renault will not withdraw from the UK market, but may be forced to increase the price of the model in the UK market."
What will be the special agreement of Jaguar Land Rover on carbon dioxide emissions?
Previously, the British government helped Jaguar Land Rover and the European Union reached a special agreement. According to the agreement, Jaguar Land Rover can relax the standard when the EU's new car carbon dioxide emissions reach 95 g / km in 2021, without having to implement such a strict goal. If the EU sees the agreement as invalid after the Brexit, then the Jaguar Land Rover, which has many large SUVs, has to catch up with fuel economy. Jonathan, secretary general of the European Automobile Manufacturers Association, said that if the UK joins the broader European Economic Area trade group, the above special agreement still applies. Otherwise, the UK and Jaguar Land Rover will need to renegotiate, which will undoubtedly force the company to accelerate the pace of electrification planning.
Will the UK adopt the same fuel economy and emissions regulations as the EU?
The answer is almost certain. Last year, the UK produced 1.6 million cars, 80% of which were exported and 53% of cars were sold to other European countries. If British cars are to continue to export, then these cars still need to comply with EU regulations, which means that these cars still have to meet the EU's stringent emission regulations and crash test standards.
If a British car exports to the EU countries to impose a 10% tariff, can car manufacturers in the UK withstand it?
Now that the UK has withdrawn from the European Union through a referendum, the country's future car exports to the EU are likely to face a 10% tariff, and parts and components will face a 2.5% tariff. Rees, a professor at Cardiff University's business school, said that British automakers can withstand a 10% tariff because these cars are highly efficient, most notably Nissan's plant in Sunderland, England. “We are the most productive in Western European countries, twice as many as the French and Italians, and also ahead of the Germans,†Rees said. As of now, no car manufacturer in the UK has clearly stated that it will change its investment plan. They are all urging the UK to reach an agreement with the EU to retain access to a single market.
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