BMM3113 - Brexit's Impact on UK Car Manufacturing: A Review

This literature review examines the impact of Brexit on the UK car manufacturing industry. It begins by defining Brexit and its implications, then presents statistics highlighting the industry's importance to the UK economy and its subsequent decline following Brexit. The review analyzes various pers...Read More

Literature review

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Concept of Brexit.........................................................................................................................2
Statistics related to car industry...................................................................................................3
Impact of Brexit over car industry...............................................................................................4
CONCLUSION AND RECOMMENDATION..............................................................................5
Summary......................................................................................................................................5
Recommendations........................................................................................................................5
REFERENCES................................................................................................................................6

Title: How was UK car manufacturing industry affected by Brexit?
INTRODUCTION
Brexit has affected whole industry in the entire world and it causes a direct impact over
the business performance in negatively. However, cars remain the UK no.1 export but leaving
EU has affected the sales of a cars in negative manner. Thus, Brexit is all about withdrawal
process of UK from EU where all the employees are agreed with the same (Suzuki, 2020). The
car industry has faces many issues regarding declining of sales and that is why, the study will
help to improve the knowledge regarding the chosen topic so that best outcome can be
determined. Brexit has resulted in EU experiencing a net population decreases and the business
sales has also affected in negative manner. Similarly, there is a negative impact identified over
car manufacturing industry and this in turn affected the sales and demand of a company directly.
Thus, the present study also shed a light upon the car industry that affected by Brexit for
that relevant author’s point of view has been selected which in turn assist to understand the
meaning effectively. Moreover, with the help of current study scholar can also understand the
issue and its impact over the car industry.
MAIN BODY
Concept of Brexit
According to Humphreys and Munro (2019) Brexit is the term which is used to determine
how UK leave EU and along with this, the entire business is also fluctuated with it. Such that by
Article 50 of Treaty of European Union regulates the withdrawal process of many member state.
Thus, there are many business who suffer from Brexit and it affect the business in negative
manner as well. UK joined the European Economic community which helps to maintain the
overall performance of the business and reduces the chances of lower down the sales of a
company. Coffey and Thornley (2020) argued that political fraternity is actually included the
people who were opposes to the idea of EU and this is also lead to increases the financial crisis
within the country. However, it has been identified that companies actually a lot from the Brexit
and that is why, most of the company took an initiation regard to their own resources so that
effective outcome can be generated.

This in turn reflected that Brexit has actually affected the entire business in negative
manner and it mainly occurred March 29, 2019 and mainly deadline continued to be extended
even after the permission of president. This in turn shows that company will now further back on
a track to provide effective outcome.
Statistics related to car industry
As per the secondary data, it has been identified that UK automotive industry plays a vital
part of UK economy and as per the current statistics there were around 78.9 billion turnover
identified in the country and it also provide many employment opportunities to the people. This
in turn reflected that there are more than 30 manufacturers build 70 models of vehicles in UK
that supported the economy to be improved because after Brexit companies are is loss
(Automotive manufacturing industry in UK-statistics and facts, 2022). That is why, it will be
beneficial for the business to start importing and exporting in order to improve the business
performance (Hancké, 2018).
The car production between 2003 and 2008 become fell down and as a result the rail
transport meet the demand of passenger. Thus, it has been identified that this industry has hit by
global financial crisis in 2008 and it was fell down by 30% in next year. Therefore, this is all
because of Brexit introduced and leaving of UK and EU took place that causes a negative impact
over the business performance and that is in turn decline the car industry as well.
In accordance with the above graph, it can be stated that the market share of the industry
is fall in next quarter of 2021 because Brexit is actually hit the business adversely. For example,

Volkswagen lost its 0.1% market share whereas some of the other brand actually gain the market
by something high i.e. Audi by 0.5% followed by BMW who was in third place in the 2021 by
gained 1% (UK 2021. Volkswagen Becomes New Leader In Market Still Not Recovering
Steadily, 2021). However, Ford become the leader of the car industry and this in turn shows that
company is somehow increasing with the efforts of the skilled employees.
Impact of Brexit over car industry
According to the views of Karlsson, Melin and Cullinane (2018) referendum on Brexit in
2016 found that national automotive industry lead it to next level. However, the last five years
the industry faces many issues but at the end of 2020, the industry started its business and
become a fourth largest in a world. The statistics shows that there is fell down identified in the
light car vehicle market in 2017 and 2018. As a result, an alarm of economic outlook with a deep
effects in a car industry that affect the business in a negative manner. Suzuki (2020) critically
argued that UK car mainly face uncertainty in the future and it has been identified that in post
Brexit most of the car makers likely leave UK and this in turn affect the business as well as
economy of a country. The research also shows that if UK access to a single market then some of
the factory could close that would be uncompetitive. Such that plants of Honda and Toyota are at
major risk due to closure after Brexit.
UK is considered one of the top exporters in the world but after Brexit the exports
converted into half and also decreases the demand which shows that the market of UK car
industry will be fall. Humphreys and Munro (2019) reflected in the study that the impact of
Brexit on supply chains also seen immediately such that Honda closing its UK plant in January
2021. It is done twice in a year and this shows that the industry has badly hit by Brexit and
affected the seamlessly supply chain so that the business affected negatively. Moreover, another
impact identified within the car manufacturing industry after Brexit is such that the price of the
protection schemes introduced in this time an only 1.63 million cars has been sold which is 29%
less in 2019 (Impact of Brexit upon car industry, 2021). This in turn reflected that the market of a
car industry has fallen after the Brexit had finally took place because UK car manufacturers have
to leave the EU and it is not easy to introduce the new business again as it required high cost of

capital. Therefore, it can be reflected that there are many reasons that causes to increase the
industrial action, mediocre quality control but UK do not have skilled people and this in turn
decreases the market into negative manner.
In addition to this, in the year of 2021 the car industry has hit negatively in order to
decrease the sales and as compared to 2020, 20% decrease has been noted but in next quarter it
actually boomed in impressive manner by selling the 4 lac unit. This in turn shows that tough
Brexit affected the business negatively but company actually performing its best to back on the
track so that effective outcome can be generated.
CONCLUSION AND RECOMMENDATION
Summary
By summing up above report it has been concluded that UK car industry has contributed
the most towards the economy but company needs to be focused upon different ways that helps
to make the industry to be a leader among all. Brexit has affected the entire UK car industry into
negative manner such that the sales of the business decreases year by year but by using
innovative way, companies sustain the brand image at global level. Through the LR it has been
concluded that car industry might decreases the supply and demand of the customers but with the
help of skilled workers, company keep trying to sold the cars in order to maintain the supply and
demand.
Recommendations
It is to be recommended to the company to use effective steps in order to generate a better
outcome. For that the ways are as mentioned below:
 It is to be suggested to use the advance technology in order to analyse the future demand
and then make innovation accordingly. This in turn helps to improve the business
performance and balance the entire car industry in an effective manner.
 It is to be suggested to support for business transition for a new trading regime where
company get the grants and loans so that it can meet the demand of a company and
generate a better outcome after Brexit imposed in the country.

 In order to remain competitive in the market, it is also suggested to the company to attract
electric vehicle and component manufacturing operations that do not require high costing
and actually it is a need of many companies so it will be better for the business to
introduce such things in order to maintain the business performance.

REFERENCES
Books and Journals
Coffey, D. and Thornley, C., 2020. Britain’s car industry: policies, positioning, and perspectives.
In New Frontiers of the Automobile Industry (pp. 137-161). Palgrave Macmillan, Cham.
Hancké, B., 2018. Made in the UK: Brexit and manufacturing revisited. LSE European Politics
and Policy (EUROPP) Blog.
Humphreys, M. and Munro, D., 2019. Brexit and the Car Industry. Routledge.
Karlsson, J., Melin, H. and Cullinane, K., 2018. The impact of potential Brexit scenarios on
German car exports to the UK: an application of the gravity model. Journal of Shipping
and Trade. 3(1). pp.1-22.
Suzuki, H., 2020. Post-Brexit Britain, the EU and Japan: The car industry, the aeronautical sector
and military cooperation. Europe and the World: A law review. 4(1).
Online
Automotive manufacturing industry in UK-statistics and facts. 2022. [Online]. Available
through: <https://www.statista.com/topics/5457/automotive-manufacturing-industry-in-
the-uk/#topicHeader__wrapper>.
Impact of Brexit upon car industry. 2021. [Online]. Available through:
<https://www.paconsulting.com/insights/brexit-and-the-automotive-sector/#:~:text=The
%20UK%20exports%20over%201.2,by%205%20to%2010%20percent.>.
UK 2021. Volkswagen Becomes New Leader In Market Still Not Recovering Steadily. 2021.
[Online]. Available through: <https://www.focus2move.com/british-vehicles-market/>.