The journey forward from Brexit Our industry's reaction to the referendum result

The journey forward from Brexit

In the days following the UK’s historic vote to leave the European Union in June’s referendum, the automotive industry and fleet sector have been busy looking at how it will impact their business moving forward.

Some have warned that UK PLC is “now in uncharted territory” with a period of instability ahead, while others suggest the UK will be able to continue trading with Europe as usual, due to the strength of our products and services.

Here we take a brief look at the reaction from some of the main players in the sector to the decision, and what they think the priority should now be.

Fleet sector

The fleet industry is of course carefully examining the impact of Brexit, with many warning of instability, in the short term.

Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA) has said:

“The British public has chosen a future out of the European Union, and like most businesses, the fleet industry will need time to assess the ramifications of the referendum result.

“The BVRLA will continue to assist members in their operations, and we will regularly update members when possible on the implications for our sector regarding the decision to leave the EU. The first priority for the Government is to restore economic stability to the UK market.

“For its part, the association will be working closely with UK and European policymakers to ensure that the exit process has a minimal impact on members and their customers. We remain confident that BVRLA members will adapt – after all, our sector is very experienced in dealing with challenge and change.”

Paul Hollick, chair of the Institute of Car Fleet Managers, said he was very concerned about the levels of uncertainty created by the decision.

Mr Hollick told trade media:

“The next 12 months will be an unprecedented period for the fleet and automotive industries, which are strikingly multinational whether you're talking about suppliers, major customers or of course the vehicle manufacturers. The leave vote clearly puts UK PLC into uncharted territory. Businesses like nothing less than uncertainty so my worry is that the prolonged period of political upheaval and economic turmoil ahead will mean that businesses go into suspended animation and inward investment will be postponed or made elsewhere."

Motor manufacturers

The Society of Motor Manufacturers and Traders (SMMT), which had previously indicated it supported the UK remaining in Europe, called on the Government to act quickly to maintain economic stability, in order to protect the industry against the new uncertainty.

Chief executive Mike Hawes said:

“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.”

Major motor manufacturers have also called for stability and pressed the importance of maintaining growth.

However Jaguar Land Rover took the view it was ‘business as usual’, and commented:

“We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions.

“Europe is a key strategic market for our business, comprising 20% of global sales, and we remain absolutely committed to our customers in the EU.

“There will be a significant negotiating period, and we need to understand more about that as details emerge. We will work hard with all parties to ensure that the importance of the British automotive industry is fully understood at every level of the negotiation process.”

What it means for motorists

The RAC’s Fuel Watch report, which analyses the fluctuations of prices at the pumps, suggests the value of the pound is likely to result in higher prices despite a drop in the world crude price.

RAC fuel spokesman Simon Williams said:

"June was another bad month for motorists with the price of petrol going up again. While it was only a penny and a half it makes for a rise of more than 10p since the start of March. Filling up with unleaded is now £5.64 more expensive which is enough to make an unpleasant dent in household budgets up and down the country, especially for those who have more than one car or need to fill up regularly."
“But it is good news that fuel prices are so far weathering the Brexit storm; wholesale prices have remained relatively stable after an initial small upward jolt as a result of the pound falling on news of the referendum result. The fact the oil price dropped at the same time lessened the negative effect of the pound’s devaluation. We may well see pump prices rise slightly in July, but current indications are that this is unlikely to be the shock rise some were predicting."
“The lower cost of a barrel of oil plays the greatest part in keeping forecourt prices down. It’s also worth remembering that compared to a year ago we are still paying around 5p less for petrol and nearly 8.5p less for diesel."
“While economists are saying the pound is unlikely to recover the ground it lost against the dollar so dramatically the day after the referendum, the oil price looks likely to stay around the $50 mark for some time due to OPEC’s continued over production strategy. There is also a hope that prices might even fall once various issues that have hindered production around the world are resolved.”