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Brexit

Auto suppliers raise fears over Brexit

Auto suppliers raise fears over Brexit

Automotive suppliers have raised concerns about future prospects following the decision by the British public to vote to leave the European Union in a referendum on 23 June.

 

"The UK’s decision to leave the EU undoubtedly will dampen European growth, which will hamper UK exports despite a weaker pound," said Ian Fletcher, a London-based analyst for IHS Automotive, in a research note.

 

"The automakers and suppliers will keep their cards close to their chests at the moment," Fletcher stated. "They were all banking on the status quo, and that hasn’t taken place."

 

Continental, which specialises in tyres, braking systems, as well as powertrain and chassis components and has 16 plants in the UK, said in a statement that it fears the ultimate breakup of the EU.

 

"We cannot allow this to happen," CEO Elmar Degenhart said in a written statement. "It would be a disaster if discontent with the political and economic situation were to lead to the breakup of the EU."

 

Ongoing uncertainty means it is also unclear whether automotive firms will subsequently face tariffs.

 

"It all depends on how well the politicians conduct these negotiations," Fletcher told Automotive News.

 

Some firms are, however, seeing at least short-term gains, with Pirelli noting gains from the reduced value of sterling.

 

"Regarding exports, higher raw material costs should be offset by sterling devaluation and control of operating costs," the Italian tyremaker said in a written statement published by Tyrepress.

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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