Waiting for Brexit: The concerns of automotive suppliers
Photo by Estelle Daligaux
Despite a general uncertainty and political disagreements, one thing is quite clear: if Brexit happens, it will have a catastrophic effect on all highly complex supply chains between the UK and the EU. This, consequently, will push car manufacturers and their suppliers to completely reshape their relationships and, most importantly, logistics.
Both British and foreign carmakers, including BMW, Toyota, and PSA, are concerned about the short and long-term costs of possible trade barriers between the UK and the continent. It can be indeed very hard to rebuild the British automotive industry concentrating uniquely on the UK itself.
British and European automotive industries are tightly interlaced. In 2018, 8 out of 10 UK-assembled cars were exported with nearly 700K cars going directly to EU27. At the same time, 1.8 million new passenger cars were delivered from the EU to the island, representing 85% of total UK car imports.
Experts are already building forecasts regarding how much Brexit will cost for OEMs. The recent article by Jasper Jolly for the Guardian mentions the possible loss of $1bn for Japanese carmakers in Britain just over a year in case if 10% tariffs were imposed between the UK and the EU. This is not including the financial hit from the potential unemployment caused by BMW and Toyota plant closures.
However, it’s not major OEMs who will be troubled the most when Brexit comes in place. Only last year, 80% of UK-imported auto parts originated from EU27. 18% of the total value of EU27 car component imports were represented by UK-build parts.
As a part of its Purchasing and Supply Chain activities, SNECI manages many logistical flows in and out of the UK for automotive suppliers. For the past two years, our expert team has been researching the probable impact of Brexit on the trade of car parts between the UK and the EU. Today, we are able to support our clients by developing comprehensive action plans and placing an internal task force in their plants in order to secure their deliveries in case Brexit comes to pass.