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Brexit: Automotive Investment Sides Because Industry Reaches "Red Alert"

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Investments in the UK automotive sector fell by almost half last year, and production fell as Brexit fears that companies will fall into the "red warning".

Last year, domestic investment dropped by 46.5% to 588.6 million pounds (£ 1.1 billion in 2017), said the Engineers 'and Dealers' Association (SMMT).

Production fell by 9.1% to 1.52 million cars, while production in the United Kingdom and exports declined by 16.3% and 7.3% respectively.

Brexit's uncertainty has "made huge damage", said SMMT manager Mike Hawes.

However, the impact on production, investment and jobs has so far not been compared to the permanent damage caused by the interruption of our careless trading relationships overnight, not only with the EU, but also with many other world markets we are currently trading freely, ”he added. .

"With less than 60 days before we left the EU and the risk of a crashing that would not lead to an ever more realistic deal, UK Automotive has warned of a red signal," he said.

He said that politicians must do whatever is necessary to avoid any agreement.

His gloomy forecast follows strong warnings from other business groups on Wednesday. Carolyn Fairbairn, Director General of CBI, said Tuesday's vote would re-discuss the UK's withdrawal treaty, "feels like a real dice."

Stephen Kelly, Executive Director of Industrial Northern Ireland, told the BBC that companies are "desperate and genuinely confused" about what is happening.

Mr Hawes said that, despite the Commons vote on Tuesday evening, "nothing has changed".

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Analysis: Simon Jack, BBC Business Editor

Investments in the automotive industry come in uneven pieces as old models are retired and new ones are introduced over time. But even assuming that this morning a new investment plunged into, it is strict.

In 2015, car manufacturers in the UK invested £ 2.5 billion. Since then, it has fallen and in 2018 it was just £ 589 million.

Brexit's uncertainty was not the only problem facing the industry – uncertainty about the diesel policy, the decline in sales in China and the cessation of production due to new regulations were also important.

But SMMT was clear that Brexit introduced what it called "the most significant threat to the UK's automotive industry's generational generation competitiveness".

Manufacturing companies relying on well-coordinated pan-European supply chains have sounded the greatest warnings about the dangers posed by Brexit without agreement. These figures will not do anything to change it.

"Significant Threat"

The 16.3% decrease in car sales in the UK was caused by uncertainty about the future of diesel, regulatory changes and the fall in consumer and business sentiment, according to SMMT.

However, exports to the EU fell by 9.6%, less sharply than the fall in domestic production.

Overall, the EU still accounts for the majority of UK exports, 52.6% or 650,628 cars. Although exports to the US increased by 5.3%, largely due to demand for premium models, Hawes warned that this improvement would change if tariffs were applied after the Brexit tax changes.

He also said that other major markets outside the EU would be vulnerable. Last year exports to Japan increased by 26% and in South Korea by 23%, but he noted that both countries were benefiting from preferential EU trade agreements.

Exports to China decreased by 24.5%. The Jaguar Land Rover (JLR), the UK's largest automaker, has already stressed that the pain is felt by the slowdown in sales in China.

Exclude JLR

This month, JLR confirmed that it is cutting down on 4,500 jobs, blaming Brexit for uncertainty, falling diesel sales and China's economic downturn.

The driver also pointed out that it would extend its April closure for an additional week because of concerns that, if the UK is released without a transaction in the UK, supplies could be interrupted.

Hawes pointed out that last year's production slump occurred in 2017, after seven years of unprecedented growth, when the industry became a recession.

"As a highly integrated industry that has maximized the benefits of the European single market and customs union, Brexit is" no business "is the most significant threat to the UK's industry's generational competitiveness," he said.

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