IHS Automotive Predicts Brexit Will Cost Auto Industry 2.8 Million Units in Global Sales
Unless you’ve been living under a rock, it’s likely you have heard about the United Kingdom’s recent vote to leave the European Union. Maybe you haven’t realized you heard about it, since it has gained the cutesy nickname “Brexit,” or maybe you just don’t give a crap about European politics, but the UK’s decision to leave the EU is going to affect the world—and the auto industry in particular—in a major way.
This decision is one that has had a huge impact on the United Kingdom’s economics already. After the vote was called, Reuters reports that the pound almost immediately fell 10% against the US dollar, which is the lowest it has been since 1985. British banks also loss about $100 billion as the stock market reacted to the UK’s Leave vote.
And now, according to a prediction from IHS Automotive, Britain’s decision could severely impact the global automotive market.
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IHS Automotive’s recent projections for the automotive industry foresee automakers losing about 2.8 million light-vehicle sales through 2018. As of this year, worldwide auto deliveries have totaled 89.82 million, which is about 200,000 less than anticipated. After the Brexit referendum, IHS has reduced the estimates for 2017 and 2018 by 1.25 million and 1.38 million respectively.
“The UK is, unsurprisingly, anticipated to bear the brunt of the impact,” said Ian Fletcher, an analyst for IHS Automotive based in London. Before Brexit, IHS anticipated the UK market expanding by 3.2% this year. Now, it may grow by only 1%, declining over the next two years, too.
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The United Kingdom’s automotive industry currently ships almost 80% of its vehicles overseas. Of this 80%, 60% are shipped to countries within the European Union. So, basically, the United Kingdom has built a $20.65 billion automotive industry on EU connections—connections that will most likely be severed.
Talk about screwing yourself over. Nice one, UK.