Britons head to the polls today to determine if the country will remain part of the European Union..
Carmakers face serious challenges if Britons vote to leave the European Union, following a hard-fought and closely watched campaign that has raged across the British Isles over the EU’s merits and values.
Jaguar Land Rover, Britain’s biggest carmaker, estimates its annual profit could be cut by $1.47 billion by the end of the decade if Britain leaves the European Union, according a report by Reuters.
JLR CEO Ralph Speth told the company’s employees this week the company would face challenges if British voters decided in favor of leaving. “It is inevitable that we would face increasing and higher tariffs, making our products less competitive in Europe,” he said in the letter.
Joseph Eberhardt, the head of Jaguar Land Rover operations in the U.S., said in an interview recently a vote to leave the EU would have dire consequences for the company.
“All hell will break loose,” Eberhardt said. “First of all it will have a short-term impact on the currency. My bigger concern is long term. Right away all the exporting companies in the UK will be facing tariffs because they are not part of the negotiated EU trade agreement if Britain) leaves. It would not be good for us.”
The worst-case-scenario estimate from Jaguar, according to Reuters, which cited internal documents that were prepared by the company’s chief economist, David Rea, outlined the possible consequences if Britons if they vote to leave the world’s biggest trading bloc.
JLR CEO Ralf Speth, left, said the automaker will lose more than $1.4 billion if Britain leaves the EU.
Reuters said the Jaguar documents offered an insight into the level of concern at a major company about the uncertainties of a future outside the EU.
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However, in the weeks leading up to the vote, the same concerns have been expressed by economists, trade groups linked to the auto industry and Jaguar Land Rover’s competitors.
“Daimler essentially supports the European associations of industry that are arguing for the UK to remain in the EU, because Europe’s political and economic integration is an important foundation for growth, employment and stability,” a Daimler spokeswoman noted in an e-mail.
“Discussions regarding the possibility of Brexit are also impacting economic growth in the EU, especially since the political situation is already very tense and economic growth is only modest,” she added.
She also noted the consensus is that a yes vote would also have a negative impact on Germany’s auto sector.
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“Reduced economic growth would affect automotive sales volumes, and the lasting devaluation of the UK’s currency would make it harder for European manufacturers to compete on the basis of prices,” she said. “Brexit would also restrict German manufacturers’ access to one of their most important export markets.”
Other manufacturers also have specific concerns.
The Vauxhall brand is sold in the United Kingdom. It is part of British automotive history and we will be closely following the UK debate on the European Referendum, GM spokesman Klaus-Peter Martin said in an e-mail.
“The UK is the fourth-largest global market for GM and the largest European market. Vauxhall is part of a fully integrated European company where it benefits from the free movement of goods and people. We employ over 4,500 people directly and 11,000 indirectly in our retailer network and supply chain there,” he noted.
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“The UK has a strong and growing automotive industry and trades freely within the world’s largest trading bloc, the EU. Not to be part of the EU would be undesirable for our business and the sector as a whole,” he said.