How COVID-19 and Brexit are Affecting the Automotive Market

How COVID-19 and Brexit are Affecting the Automotive Market

The automotive industry in the United Kingdom has suffered significant losses since the beginning of the pandemic. The COVID crisis has cost the car industry around £ 20 billion. Meanwhile, monthly sales in China exceeded those in 2019 and for 2021 they are expecting to rise another 4%.

“In the first few weeks, we only see the tip of the iceberg,” said trade expert Martin Palmer of Hurricane. Partially affected are those producers who have used Britain as a distribution station for their trade with the EU. “The car industry in the UK has spent 735 million pounds (over 820 million euros) in its preparations for Brexit”, the British Association of Motor Manufacturers and Traders and the SMMT (Society of Motor Manufacturers and Traders) shared. More than two-thirds of SMMT members have said they were doing their best in 2020 to prepare for Brexit, with more than half of them already having the new EORI trade codes so that they can trade more effectively with the EU. But a fleeting glance at the Dutch ferry port Hoek of Holland says much more about Brexit than several political statements.

David Henning, a trading expert from the UK Trade Forum shared that “Some companies have already stopped exporting; others will follow them due to administrative burdens. We are facing an inevitable economic adjustment, and some of the consequences will be noticeable only in years to come“, with companies still looking for clarity for the new custom systems. He also shared that the automotive industry will withdraw from the UK when production there is no longer profitable – but first, it will look to recoup its investment.

On the other hand, in China’s new energy vehicle market, stock prices continue to rise dramatically. In November 2020, the monthly sales of Wuling Hongguang MINI EV (36,000 units) exceeded the Tesla Model 3 by 10,000 units. The Chinese Automobile Association is predicting total vehicle sales in 2021 to increase by 4% with 26.3 million units, with the success of Weilai, Ideal, and Xiaopeng successfully joining the US stock market.

And on the other side of the globe, General Motors is leading the recovery of the American automotive industry, with sales increasing 5% due to thriving demand for electric cars. And General Motors’ commitment to American manufacturing and leading the transformation of the automotive industry was recently recognised, for the fourth year in a row, as one of America’s Most JUST Companies by Forbes and JUST Capital.

Meanwhile, in Germany, Mercedes-Benz was forced to temporarily suspend the production of some models, including the A-Class, at the Rashtad plant. Many car manufacturers in Europe, like Volkswagen, suffered from a lack of spare parts and additional equipment for their models, which disrupted their production plans.

 “If you can afford it, now is an excellent time to get a great deal. If you’re looking for a popular model, you have to move quickly because of a supply chain disruption“, buyers are sharing in many online forums and popular social media services. This claim can be supported by Volkswagen-owned company Bentley Motors, which shared that it has sold a record number of its luxury sedans and SUVs. The company sold 11,206 vehicles in 2020 – despite a 7-week closure of its factory in England,  compared to 11,006 vehicles in 2019.

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