The Big Brexit Vote Could Spell Curtains for Britain's Auto Industry

Jim Motavalli

Jim Motavalli | Jun 27, 2016

Brexit is a big fat mess, with the country having second thoughts after getting over the euphoria of the vote. Trade issues are huge, and autos are one of the industries most in doubt.

Let’s stipulate up front that England doesn’t really have a home-owned car industry. Nada, zip, unless you want to start talking about tiny entities like McLaren and Morgan.

TVR? Defunct after a Russian took it over, though there are brave plans to restart under British ownership. Lotus? Malaysian ownership, and moribund as a carmaker. Jaguar/Land Rover? India’s Tata got that one. Aston-Martin? A multinational conglomerate. Rolls-Royce? Germany’s BMW. Bentley? Volkswagen. MG? Let’s not go there.

But that doesn’t mean that auto manufacture is dead in Britain. Jags, Rolls-Royces and Minis are still made on native soil. And carmakers will be wanting to export those cars to Europe. Without an EU trade deal, European countries are free to slap huge tariffs (10 percent, maybe) on British car imports. Honda and Toyota build cars in Britain, too--will that still be cost-effective with new taxes?

It's the auto workers who are going to pay for this. As my distinguished colleague (and British car fanatic) Jamie Kitman notes, they may have little recourse but to, "as the ribald old trope suggests, lie back and think of England."

In the 60s, when MG and Triumph were big brands (before the Japanese invasion), England was our biggest auto partner. The British industry slogan was “export or die.” And they were serious. It’s why most of the XK120s, TR4s and E-Types ended up over here with left-hand drive. That emphasis continues. Today, 80 percent of the cars made in Great Britain are exported (to 100 countries), and Brexit could make many of them non-competitive on price. Jaguar, which opposed the mandate, estimates it could lose $1.47 billion in annual profits.

And it’s not just whole cars. According to Forbes, “Britain’s biggest export to the EU is automotive parts, and auto parts are exempt from the WTO accords, so Europeans would be free to discriminate against them with tariffs. European exporters are also worried about sales to British customers. The British buy a lot of German cars.”

The E-Type from the movie Austin Powers. ( Photo)
The E-Type from the movie Austin Powers. ( Photo)

American automakers also took a big hit when the results of Brexit were announced. Why? Ford and GM maintain big divisions in Europe, and Fiat/Chrysler is a European company. All will be disrupted by the vote, and the Dow Jones reacted with a 3.4 percent drop.

I could find only one hand clapping about the vote—at Road & Track. British car enthusiast Jack Baruth says he understands “the English desire to be free of Brussels.” Live free or die, apparently.

Baruth sees Brexit as a golden opportunity for the British to take a stand for national sovereignty and relaunch a domestic car industry. Sure, why not? He wants “enterprising British investors to purchase existing brands and bring the ownership back to that scepter’d isle.”

Oh c’mon, if that was going to happen why didn’t it—under more favorable conditions—in the almost  40 years since British Leyland imploded around 1980?

 For Baruth, it’s personal. He doesn’t think that Jaguars built under Indian ownership are really Jags. The Britishness “is part of the romance.” But let’s look at this without the mist of nostalgia. The main reason cars built by old-world craftsmen, with wood dashboards and leather seats, went the way of the dodo is that they were uncompetitive (in technology and price) with the upstarts from Japan. Now British cars are likely to get even more expensively out of reach, and profits are what fund innovation.

 Baruth wants “a new Triumph Stag” and he wants it “properly English, from the balance sheet to the rear differential.” There’s more chance of seeing a passenger pigeon in the wild. The Stag was a piece of junk anyway, a poorly engineered and badly assembled assemblage that broke hearts on both sides of the Atlantic. And a nightmare to restore, too. I read an account of one poor sap who threw his whole life savings into one, and it was still running badly.

Like all British cars, the Stag was strikingly attractive. That’s how they sucked in unwary buyers. But it all came crashing down through labor strife and pigheaded titled leadership. Frankly, the hope of reviving the made-in-England auto industry always rested with vibrant foreign partners--which is exactly what happened. Without that investment, you'd only see British cars in museums and concours show fields. And the industry's tenuous hold on to life is threatened further by Brexit. 

Here's a wordless look at the British car industry, and what's threatened by leaving the EU:


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