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A German Could Be Set To Take The Helm At Europe���s Most Powerful Bank ��� And That Could Mean A Lot For Future Policy

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By Rob Hull For Thisismoney.co.uk >

Published: 03:49 EDT, 25 June 2016 | Updated: 07:52 EDT, 25 June 2016

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With the motor industry supporting some 800,000 UK jobs, the referendum result voting in favour of leaving the EU has gone against the wishes of three quarters of firms within the sector, according to a recent survey.

But the move away from the European Union could have a wider impact on the nation's drivers as well as those involved in the automotive industry.

Here's a rundown of what might change for motorists and UK car manufacturing as a result of Brexit.

We're out: But what impact will it have on the automotive industry in the UK? And will British drivers face steeper costs for cars, insurance and fuel?

We're out: But what impact will it have on the automotive industry in the UK? And will British drivers face steeper costs for cars, insurance and fuel?

UK motor industry

According to the Society of Motor Manufacturers and Traders, the automotive industry accounts for more than £69.5 billion in turnover and £15.5 billion of value added to the UK economy each year. 

It directly employs some 160,000 people in manufacturing and a further 799,000 across the wider sector. More than 30 car manufacturers produce in excess of 70 models of vehicle in the UK alone, which is supported by more than 2,000 component providers in the country. A massive 1,587,677 cars rolled off UK production lines in 2015.

In short, it is one of the biggest industries that could be affected by a decision to opt out of the EU, especially when you take into account that 11.8 per cent of total UK exports are from this one sector - the majority of which end up in Europe.

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Speaking after the results of the referendum, Mike Hawes, SMMT chief executive, said, 'The British public has chosen a new future out of Europe. Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests. 

'This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment.'

HOW THE VOTES WENT IN AREAS WHERE THE MOST UK CARS ARE BUILT

JAGUAR LAND ROVER: The Indian-owned manufacturer produced 489,923 cars at UK plants in Castle Bromwich, Halewood and Solihull where the vote was in favour to leave by 56 per cent over 44 per cent.

NISSAN: The Sunderland plant not only builds the Juke, Qashqai and Note it also makes the powertrains for the electric LEAF and Infiniti models - 476,589 cars in total last year.

That makes the 61 per cent vote in favour to leave despite 7,000 people being employed at the car facility. 

MINI: A total of 201,207 cars were built at the Oxford plant last year. The majority of voters wanted to stay in the EU, with 70 per cent casting their vote for the remain campaign. 

TOYOTA: The Japanese car brand made 190,161 Auris and Avensis models at the Burnaston facility in Derby last year. The vote in the region was 57 per cent in favour to leave.  

HONDA: The Swindon plant produced a total of 119,414 cars last year, with the Civic, CR-V and Jazz all built at the facility. Some 55 per cent of votes in the area chose to back the Vote Leave campaign. 

VAUXHALL: The Astra is the lone British-built car for Vauxhall, but due to the massive demand they produced 85,241 of them in 2015. Wirral marginally favoured remain with 52 per cent of votes.

According to a recent survey carried out by the industry representative, 77 per cent of its members - large and small - said a vote to remain in the EU would be best for their business. 

Some carmakers have been more outspoken about the subject than other.

Japanese manufacturer Toyota, which produces cars and engines at its sites in Burnaston, Derbyshire and Deeside in North Wales said in a letter to its workers on Monday: 'If the UK leaves the EU, we think it unlikely that the UK can keep the current trading arrangements … and this would mean we would have to pay duties on parts and cars.'

Nissan, which has a long-established car plant in Sunderland - turning out half a million motors a year - even took legal action against Vote Leave for using its logo to back the campaign.

Last week, BMW voiced its concerns by saying a vote to leave 'won't make life any easier'.

Dr Ian Robertson, global sales and marketing director at BMW, said: 'It's very simple. We have no plan B. We will continue whatever the result and consider our next steps then. There's no immediate issue. The UK is our fourth biggest market.

'But it could impact on future investment plans. We just don't know. If Britain leaves the EU there will be great uncertainty.

'We employ 8,000 people directly in the UK and support a further 50,000 jobs. We also have a lot of UK employees working abroad in Europe.' 

And according to the Financial Times, Ford said it 'will take whatever action is needed' to keep its UK operations competitive in a sign the car group may be preparing to cut costs in the wake of the Brexit vote. 

The carmaker said: 'We will continue working toward this goal with key stakeholders in the UK and across the other Member States and EU institutions to ensure they understand our concerns which mirror those of the majority of the UK and European auto industry.

'While Ford will take whatever action is needed to ensure that our European business remains competitive and keeps to the path toward sustainable profitability, we have made no changes to our current investment plans and will not do so unless there is clear evidence that action is needed.'

Range Rovers and Land Rovers are built on the production line at the Jaguar Land Rover factory on January in Solihull

Range Rovers and Land Rovers are built on the production line at the Jaguar Land Rover factory on January in Solihull

TOP EXPORT DESTINATIONS FOR UK CARS 
EU 57.5%
US10.9%
China7.0%
Turkey2.9%
Australia2.8%
Russia2.0%
Japan1.8%
South Korea1.7%
Canada1.2%
Israel1.2% 
Source: SMMT  

Stephen Cooper, head of Industrial Manufacturing at KPMG UK said there will be 'very real implications' to the access of engineering talent as a result of the vote to leave.

'Manufacturers will need to consider their strategy,' he said. 

'Firstly in retaining their non-UK workforce, secondly in attracting non-UK based expertise and thirdly, more long term and one for the government to support, in developing talent on a much greater scale than they do currently.'

But Cooper also added that the move could be a positive step for UK-based carmakers. 

'We should not lose sight of the fact that this result can also lead to opportunities for manufacturers,' he added.

'A drop in the value of sterling could make the UK a magnet for trade, and the need to reshape trade policy may result in quicker decision making, and reduced red tape.'

Buying a car

The RAC said there's little evidence to suggest that a decision to leave the EU would make buying a car more expensive. The UK is one of Europe's largest car markets, so it is widely expected that manufacturers will be keen to stay competitive. 

Longer-term, trade tariffs between the UK and EU would need to be renegotiated, though. Unfavourable deals could lead to cars becoming cheaper abroad – and perhaps the return of unofficial 'grey' imports from Europe. 

Toyota said this could mean paying duties on cars of as much as 10 per cent - this would mean carmakers having to decide between making losses or charging more for their vehicles.

Online broker AutoeBid.com said it expects list prices to increase. 'Brexit has knocked 10 per cent of the value of the pound this morning and leaves great uncertainty for EU car manufacturers with trade terms now requiring negotiation,' a spokesperson for the site said.

'We believe that list prices will increase significantly over the coming months to adjust for the new exchange rates, making now a great time to buy your next car.

'For those buying on finance the historic low interest rates may be hard to maintain, also causing a sharp increase in monthly payments. To defend the pound's decline central banks typically have to raise interest rates.'

There will also be implications for anyone who has purchased a car on finance, as the Financial Conduct Authority explained.

'Much financial regulation currently applicable in the UK derives from EU legislation,' it said. 

'This regulation will remain applicable until any changes are made, which will be a matter for government and parliament. Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.'

The AA had predicted fuel prices could rise by 19p per litre on the back of a Brexit vote, though other commentators have vetoed the suggestions

The AA had predicted fuel prices could rise by 19p per litre on the back of a Brexit vote, though other commentators have vetoed the suggestions

Petrol and diesel prices

According to comparative figures, the UK is already one of the most expensive places to fill your tank in Europe.

Some commentators have predicted steep post-Brexit price increases of up to 19p per litre. 

The AA said a 'worst-case scenario' would see petrol prices soar by 18.7p per litre, leaving a two-car family that refuels twice a month £494 worse off each year.

That was based on predictions from Goldman Sachs and HSBC that the pound's value could fall by 20 per cent after Brexit.

However, RAC fuel spokesman Simon Williams advised caution, saying: 'A 20 per cent fall in the value of the pound would – based on current exchange rates – only add £2 to the cost of filling up an average 55-litre petrol car. 

'This would mean a two-car household filling up with petrol twice a month would spend £232 as opposed to £224.

'While the strength of the pound is a significant factor in the price motorists pay for petrol and diesel due to wholesale fuel being traded in dollars, the oil price is currently a greater influence.' 

Williams later added: 'It is too early to tell what the implications are in the mid to long term but it is likely motorists will see some volatility in the price of fuel on UK forecourts in the coming weeks. 

'While the cost of crude has dropped as markets react to fears of a global economic slowdown the fall in the value of the pound to levels not seen since 1985 means that retailers are facing an increase in the wholesale price of around 1.5 pence which will very be likely passed on to motorists at the pump.'

Driving in Europe

Britain has never been part of Europe's passport-free Schengen area, so existing passport checks will remain at borders.  

Once inside the EU, British drivers would still be able to travel freely, with healthcare costs covered by the existing European Health Insurance Card. 

Length of stay could be limited, though. Many non-EU nationalities are restricted to 90 days maximum without a visa.

The RAC also warned that new trade agreements post-Brexit would almost certainly mean tighter Customs controls. 

'This could lead to delays when leaving or entering the UK, and spell the end of the cross-Channel booze cruise, as personal allowances for alcohol and cigarettes are likely to be reduced,' the motoring body commented.

'On the flip side, we could see the return of duty-free shopping at ports and on ferries.'

Breakdown cover and insurance

The vote to leave the EU is not likely to affect breakdown cover abroad, the AA and RAC have both said. 

However, the consequences for car insurance are less certain. 

The EU Motor Insurance Directive, which guarantees that drivers are insured throughout Europe, may no longer apply – potentially increasing the cost of cover for driving abroad.

A 2012 European Court of Justice ruling that insurance companies could not take a driver's gender into account when setting premiums could also be abandoned. 

In theory, that would lead to higher prices for men, but significant savings for women. 


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Source : http://www.thisismoney.co.uk/money/cars/article-3658133/What-Brexit-mean-motorists-UK-automotive-industry.html

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