Britain's Auto Industry Enters The Big Unknown

Illustration for article titled Britain's Auto Industry Enters The Big Unknown
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1st Gear: The Period Of Uncertainty Begins

The United Kingdom’s auto industry is a lot more than just Jaguar, Land Rover, Mini and a handful of niche expensive sports car manufacturers. It’s home to thousands of jobs and a huge manufacturing base for companies like Ford, Nissan and Honda. It’s also Europe’s second-largest auto market after Germany, and the biggest export market for German car companies.

So Britain’s vote to leave the European Union has thrown everything into chaos and confusion today, particularly where tariffs and trade agreements are concerned. Automotive News has a great roundup and here are some highlights:

BMW, whose Mini and Rolls-Royce units build cars in the UK, warned of a “period of uncertainty” but said there will be no immediate change to its UK operations. Many conditions for supplying the European market will now have to be re-negotiated, BMW said in a statement. “We cannot say what this means for our UK operations until those future regulatory and legislative arrangements are agreed,” the German premium automaker said.

General Motors’ European arm Opel said it was important to its UK-based Vauxhall division for Britain to remain part of the European Economic Area to allow the free movement of goods and people within Europe. The European Economic Area is open to EU member states and non-EU countries from the European Free Trade Association, which includes Switzerland, Norway and Iceland.

Ford Motor said it had not changed its investment plans yet, but would take whatever action is needed “to ensure that our European business remains competitive.” Ford has three plants in the UK making engines and transmissions.

But the effects of Brexit have already been felt as stocks and the pound sterling fall on the news of the vote.

Shares of India’s Tata Motors’ plunged 12 percent today, their biggest fall since 2012. Tata owns Jaguar Land Rover, the UK’s largest carmaker by production, which relies on Europe for about 20 percent of its global sales.


With anti-Brexit UK Prime Minister David Cameron announcing his resignation, his successor will likely have to lead the UK out of the EU, a process that could take years. At least everyone has time to figure it out?

2nd Gear: And It May Slow Investments In The UK Auto Industry

But this period of uncertainty is also likely to slow down investments in the UK auto industry; Reuters is already hearing rumblings of that from Asian manufacturers like Nissan and Honda.

Toyota and Nissan had said in the run-up to the vote that continued membership of the European Union was preferable for their operations: a vote to leave would create new challenges for an industry that employs some 800,000 people in Britain.

Even so, Sunderland in northern England, where Nissan has its operations, was among the constituencies that surprised pundits by the extent to which voters supported an exit.

Shares in all Asian automakers tumbled.

“We don’t have any choice but to be more cautious with our investment decisions, including moves like whether to produce a new or significantly redesigned vehicle model in the UK,” said one official at a global automaker with manufacturing capacity in Britain, speaking on condition of anonymity.



3rd Gear: Here Come The Jeep Lawsuits

Meanwhile in America, the inevitable has happened: Jeep Grand Cherokee owners have filed a lawsuit against Fiat Chrysler, accusing the automaker of concealing a shifter design “defect” linked to rollaway accidents and possibly the death of actor Anton Yelchin.


I’d like to point out it’s not so much a defect as a lack of safeguards like other automakers had on the same gearbox, but here’s Reuters (via CNBC):

The class-action complaint, filed in U.S. District Court in Riverside, California, east of Los Angeles, alleges that the design flaw affects 811,000 vehicles, including 2014-2015 model year Jeep Grand Cherokees, 2012-2014 Chrysler 300s and 2012-2014 Dodge Chargers.

The lawsuit states that Fiat Chrysler Automobiles NV concealed both its shifter design defect and hundreds of related accidents that caused property damage and injuries. The plaintiffs also allege that the “raft of negative publicity” surrounding the recent disclosure of the problem has greatly diminished the resale value of their vehicles.


4th Gear: South Korea Issues Arrest Warrant For VW Executive

Of all the countries probing Dieselgate, and there are many, it would appear South Korea is fucking around the least. A court there today issued an arrest warrant for a Korean executive implicated in the scandal. Via Reuters:

The Volkswagen Korea executive, identified by his last name Yun, faced five accusations including fabrication of documents and violation of the Air Quality Preservation Law, Seoul Central District Court spokesman Shin Jae-hwan said.

“The court acknowledges the reason and the necessity of the arrest,” he told Reuters, declining to give further details or name the executive.

[...] South Korea has taken a particularly hard line against the automaker, filing a criminal complaint against two other executives, fining it 14.1 billion won ($11.97 million) and ordering it to recall 125,522 vehicles.


5th Gear: Jeep Compass/Patriot Replacement Coming To LA

This fall at the Los Angeles Auto Show, the world will finally see the successor to the Jeep Compass and Jeep Patriot, two platform-mates that are easily among the worst cars currently on the market. Via the Detroit Free Press:

The Jeep that will replace the two aging compact SUVs has been anticipated for several years and is the next phase of Jeep’s global growth plan to top 1.9 million in annual sales by 2018. Fiat Chrysler originally planned to reveal the vehicle at the New York International Auto Show in March, but those plans were scrubbed.

“There has been no delay in terms of our production cadence,” Mike Manley, head of the Jeep and Ram brand for Fiat Chrysler Automobiles, said today. “Because it is a global vehicle ... as I got into the year, I felt it was more appropriate for us to celebrate that in Brazil.”


Also, if you’re not depressed enough today:

Last year, Jeep sold 118,464 Patriots and 66,698 Compasses in the U.S., or about 21% of the brand’s total sales in the U.S.


I think at this point people will just buy anything with a Jeep logo on it.


Reverse: Safety


Neutral: Will The British Auto Industry Weather The Brexit?

Probably. But that industry has seen a tremendous turnaround in recent years, and the instability from this could slow it down quite a bit.

Editor-in-Chief at Jalopnik. 2002 Toyota 4Runner.



I understand how upset people who voted Remain are about the Brexit. The level of freakout that some people seem to be having seems a little strange to me, though. The EU is barely over 20 years old. Was everything on fire in 1992 or something?