The consequences of a no-deal Brexit have a longer-lasting adverse effect on British car manufacturers than the corona crisis. That says credit rating agency Moody’s, who mainly points to Jaguar Land Rover and Aston Martin. Their profitability could suffer.
Foreign automakers are affected according to how they deal with the UK, for example because of factories there. Toyota, Nissan and Honda, among others, make cars in the United Kingdom. BMW, which owns the originally British brands MINI and Rolls-Royce, is the European car manufacturer that could be hit the hardest.
In a no-deal Brexit, the potentially increasing domestic demand will not be enough to ease the pressure on British automakers, Moody’s believes. That pressure is caused by import duties, trade barriers and a possible depreciation of the pound. “The economic situation for the UK is already uncertain and a no-deal Brexit would only reinforce this,” said Tobias Wagner of the rating agency. “This creates more challenges for car manufacturers.”
Warn car manufacturers
Moody’s statements follow warnings from Daimler and Bentley, among others. Both the British Bentley and the German Daimler expect major (financial) consequences if no deal is reached between the EU and the UK. Toyota and Nissan would have already indicated that they want to be financially compensated by the British government if it does not come to an agreement with the European Union. Honda previously decided to pack its bags at all and no longer build cars in the UK.