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Brexit Could Cause Vauxhall to Close its UK Factory
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Categories Automotive Industry » Driving News »
One of Britain’s biggest car manufacturers has warned the government that it may have to consider closing its UK factory if the country does not renegotiate its Brexit deal with the European Union.
Vauxhall is one of the UK’s biggest automotive successes, having been founded in the country back in 1857. However, in 2021 they were acquired by the Italian-American consortium Stellantis, which also owns Peugeot, Citroen and Fiat.
Vauxhall’s parent company had previously committed to using the UK as its main base for electric vehicle manufacturing, but has now stated it may need to reconsider if the Brexit deal does not change.
In this blog, we’ll explore the reasons why Brexit is impacting the car manufacturing industry and how some of the industry’s biggest brands are responding.
Stellantis’ main concern is in regard to trading tariffs. Due to EU rules on where car parts are sourced from, they could face tariffs of 10% on exports, which would hugely impact the manufacturer’s costs.
In a House of Commons Inquiry with the British government, the firm stated that the current Brexit rules are a “threat to our export business and the sustainability of our UK manufacturing operations.”
This marks the first time a manufacturer has directly requested the UK government return to the negotiating table with Brussels.
Before the Brexit referendum in 2016, the UK manufactured more than 1.5 million cars a year. Since then, there has been a notable dip with 2022 statistics the lowest for over a decade, showing the country manufacturing just 775,000 cars.
While there are a number of reasons for this, Brexit is undoubtedly a key factor. As outlined by Stellantis, the main problem surrounds tariffs.
Due to the UK leaving the EU, from 2024 manufacturers based in Britain will face a 10% tariff on goods exported to Europe. This is because from next year, the EU will insist that 45% of the value of an electric car should originate from EU or UK suppliers. This is set to increase to 65% from 2027. Due to the way it sources parts, this would be impossible for Stellantis to trade without incurring costly tariffs unless a renegotiation takes place.
The brand wants the current rules to remain in place until 2027, to give itself more time to find ways to source new parts that comply with EU rules.
Stellantis are not the only manufacturers who have expressed concerns regarding its future in the UK.
In February, Japanese manufacturer Nissan’s Chief Operating Officer, Ashwani Gupta, said that the UK needs to do more to ‘remain competitive’ with other car-making countries or they may have to take their electric car manufacturing operations elsewhere. Nissan currently employs more than 6,000 people at its plant in Sunderland.
In 2021 Honda closed its factory in Swindon, causing more than 3,000 people to lose their jobs and significantly hurting the town’s economy.
And German giant BMW has made the decision to manufacture its new electric Mini in Germany rather than its UK premises.
But it’s not all doom and gloom for the UK market.
Jaguar Land Rover has recently decided to select the UK for its new car battery factory, selecting the country over Spain, where it was also considering building the plant.
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