[ooyala code=”U0ZmFsNDE6Q3_YKE4GOmSgyL-QJW68n1″ player_id=”fbfbf2d44e474d0a9fa6b1c6989e65c3″ auto=”true” width=”1920″ height=”1080″]
Before the U.K.’s Brexit vote, Jaguar Land Rover warned that leaving the EU could have adverse effects on Britain’s automotive industry.
But things may be even worse than JLR anticipated. Since Britain voted to leave the EU, the value of the pound has taken a sharp downturn, reaching a 31-year low against the dollar and a three-year low against the euro, according to Automotive News. As a result, many European manufacturers fear they were too conservative when predicting the worst-case scenario of Brexit.
“We ran every ‘Leave’ formula, every possible way,” Automotive News quoted an anonymous European executive as saying. “The European recovery just gets pushed back in every way.”
Analysts suggest that in the short term manufacturer’s sales will be effected by inflation, which industry insiders reportedly suggest is already happening at the dealer level. It is estimated that sales could decline by as much as 10 percent this year.
However, manufacturers will start seeing the true effects of Brexit over the next few years. Tariffs are expected to reach 10 percent, on U.K. imports and exports, in the next two years.
Companies like Nissan will suffer the most. The Japanese manufacturer produces roughly 475,000 vehicles in its U.K. plant, the majority of which are then shipped elsewhere.
After enjoying record setting sales in 2015, manufacturers will have to batten down the hatches if they want to survive.
Thumbnail photo via Matt Kartozian/USA TODAY Sports Images