Great Britain's decision to leave EU could be the biggest blow to its automotive industry since the 2008 financial crisis. 80 per cent of the automobiles manufactures in the UK are exported, out of which EU has a massive share of 57.5 per cent.
While automobile manufacturers have claimed that its usual business for the companies as of now, it is the auto component manufacturers who have now expressed their worry. United Kingdom remains a major hub for some of them like Robert Bosch GMBh and ZF.
(ZF is one of the many auto component manufacturer that will be hit by Brexit)Bosch has been active in the UK since 1898. With sales of approximately 2.7 billion pounds (3.7 billion euros) in 2015, the U.K. is currently Bosch's second largest European market after Germany. In total, Bosch employs some 5,300 associates at 40 locations (including seven manufacturing locations) in the United Kingdom. All four business sectors wherein Bosch operates; Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology - have facilities in the UK.
Dr.Volkmar Denner, CEO of Robert Bosch said, "The EU is a successful project. We are disappointed by the decision to take the UK out of the world's largest single market, not only for economic reasons. The long-term economic consequences will only become apparent gradually. We are currently examining the effects of leaving the EU on our business. In addition, we have already put precautionary measures in place. For example, we have significantly raised our hedging ratios in order to counteract a possible depreciation of the British pound. We currently do not have any plans to scale back our capital expenditure in the United Kingdom."
ZF, the third biggest auto component manufacturer, is also a major supplier to British luxury car manufacturer Jaguar and Land Rover. It has over 3,000 employees under it in 9 locations around Great Britain. ZF generated close to 1.9 billion Euros in sales, last year. While it is too early to comment on the impact of Brexit, companies do believe that they have enough time to be ready for the consequences. One of the companies that will feel the heat the most is Tata Motors as it owns Jaguar and Land Rover and both these British brands have EU as one of their major markets.
Once United Kingdom formally leaves the EU, it will have to deal separately with the member states of EU for trade and other policies and it might take up to 2 years for that to happen. Experts suggest that it is more likely that Europe based manufacturers will likely be less affected than companies that use the UK as a base in Europe for their operations.
