Car Makers Winning From Falling Pound

The fallout of Brexit and the weakening of the pound has led to Britain’s car industry reporting record exports for the 11 months leading up to December. Will the likes of Nissan and Honda benefit and see share values rise?

Car exports for the UK in 2016 total 1.25 million thus far – the highest figure ever recorded – as factories have been forced to increase overtime to meet the demand for British-manufactured vehicles abroad.

Car sector experiences 17-year high but future remains unclear

The fall of the pound – to around €1.2 and $1.25 from €1.35 and $1.5 this time last year – is part of the reason why the automotive industry has experienced such a boost, with reduced regulations and the need for the UK to maintain zero tariffs also cited as factors.

2016 figures

• UK car production in 2016 totalled 1.6m units prior to December.
• This figure is a 9.6% increase on last year and the highest since 1999.
• In November, 170,000 vehicles were produced, a figure previously not seen since 1999.
• Of these 170,000, 33,745 units were produced for the UK market, an increase put down to the rising cost of imports.
• The automotive industry currently turns over £71.6bn annually.
• 169,000 people are employed in car manufacturing, while the automotive industry as a whole accounts for 814,000 jobs.

Nissan and Honda UK operations

This year, Nissan UK announced that it would be expanding production here, giving a jobs boost to Sunderland, where it currently employs 7,000 workers at its manufacturing plant, while in 2017, Honda’s Swindon site will start producing the five-door Civic.

Is the future as bright as it seems?

Brexit and the resultant uncertainty regarding trade deals with Europe and the rest of the world remain a concern for carmakers, with Nissan threatening to go back on its expansion plans if the cost of parts and export charges rise too high.

The chief executive of the UK’s car industry trade body also highlighted the risks a ‘hard Brexit’ posed to the future of the industry, saying that, although “these latest figures highlight the fact that the UK is a globally competitive place to make cars“, success “will continue only if we can maintain the competitive trading conditions that have enabled the UK to become an automotive success story.

It’s clear that the car industry is enjoying something of a renaissance, but it appears that future investment will depend on the political direction the UK takes in the years to come.

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