The Harrison Drury Blog

How would the automotive sector react to Britain leaving the EU?

A key aspect of the Brexit debate is the movement of manufactured goods across continental Europe. Harrison Drury’s specialist solicitors within the automotive, transport and logistics sector consider what this could mean for the automotive supply chain.

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Logistics and the supply chain

As a member of the EU, British citizens and businesses enjoy free movement between member states with minimal disruption. This freedom could, however, be lost if there was a Brexit.

As a result, each European border could impose a slow and painstaking process of passport control and goods assessment for logistics traffic. Operating outside the EU could therefore increase costs and complications in the supply chain and inhibit free movement of goods across borders.

Would foreign car-makers leave the UK?

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The automotive sector represents more than 800,000 jobs in the UK, and is worth an estimated £15.5 billion to the UK economy. Research by the Society of Motor Manufacturers and Traders (SMMT) showed 77% of members believe remaining in the EU is the preferred option.

Moreover, major foreign car makers with large UK operations – including Nissan, BMW and Toyota – have recently made clear their strong preference for the UK to remain in the EU.

There are worries among pro-EU campaigners that an exit from the EU would result in these industrial heavyweights moving their manufacturing processes elsewhere, potentially putting thousands of Britons out of work.

A fresh era of opportunity?

Conversely, Ian Milne, chairman of the think tank Global Britain, is sceptical about whether such companies would actually up sticks following a Brexit.

Milne points out that car manufacturers have plants in countries all over the world outside the EU. Toyota has plants in 22 countries outside the EU, while Renault-Nissan has 12 and BMW has 11. And he asks:

Would these three giant car companies really pull out of Britain, the sixth largest economy in the world?

Additionally, some commentators have discussed the opportunities that may arise following a Brexit. They say this would most likely lead to an increase in demand for specialist logistics services, such as managing complicated customs procedures, as businesses get to grips with life outside EU-negotiated free trade deals.

Harrison Drury has a specialist team of solicitors in the automotive, transport and logistics sector. For more information, feel free to call our head office on 01772 258321. We have lawyers based all throughout Lancashire, including Preston, Lancaster, Garstang, Kendal and Clitheroe.

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