The Brexit could lead to a significant decline in UK market
- The vote in favourof Brexit generates a series of unknowns, and its consequences remain to be defined.
These will depend on negotiations that will take place to set new rules governing trade relations between Britain and the European Union. And concluding agreements of this scale will take time. The Brexit therefore opens a period of instability and uncertainty.
These will depend on negotiations that will take place to set new rules governing trade relations between Britain and the European Union. And concluding agreements of this scale will take time. The Brexit therefore opens a period of instability and uncertainty.
- The high export British car industry (eight out of ten cars are exported) spoke for “Remain”, pointing risks of custom duties coming back. Tariffs would indeed increase the sale price of both each car assembled in Britain and each imported car in Britain.
- In the short term, the Brexit could lower economic activity in Britain, making decrease car market and local production (decline in exports). The UK market has already declined in June 2016 (-0.8%), after rising 4.1% in the first five months of the year.
- Inovev now expects, as its medium scenario, stability of the UK market in 2016 (+ 0.5% for total 2016 against Total 2015), decreases of 5.5% in 2017 and 6.0% in 2018. This drop in the British market will be the consequence of the slowdown economic growth, the depreciation of the pound and reduced buyer confidence. Nevertheless, the UK market had risen in the last four years (+ 35% between 2011 and 2015) and the level now provided by Inovev for 2017-2018 will be a level still very close to pre-crisis (2005 -2007).
- It has to be noted that scenarii that can be provided at this time are uncertain, as it is impossible to anticipate what will happen between EU and UK in next months, and the drop might be still sharper.
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