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Industry in disarray

Adel Murad
One would have to go back a few decades, to the days of British Leyland and the Thatcher government, to find a period when the British car industry was in such disarray. Then, the single issue was privatization, and Leyland lost its fight and became extinct. Now the issue is more complicated.
There is no clarity on the future after Britain leaves the EU. As such, major companies cannot take serious investment decisions about future expansion and location of factories. Some, such as Nissan and Toyota, are seeking assurances from the British government, while other home-grown companies such as Aston Martin and McLaren face uncertainties.
Amid the confusion, companies are asking for clarifications, but the government itself does not know what terms will come out of negotiations with the EU. Any government assurance means compensation, if required, from the public purse.
Car production in the UK in June was down 14 percent on what it was a year prior. This year, total production is likely to decline by at least 100,000 cars. In addition to the lack of clarity on Europe, a drop in consumer confidence, the weakening of the pound against the euro and inflation have taken their toll on new car sales in the UK.
To top it all, the government announced a ban on the sale of new petrol cars in favor of electric and hybrid cars as of 2040. In car terms, that is a generation or two away from current production cycles. This prompted one car company to call for subsidies in order to compete. That was the same demand by British Leyland some three decades ago.
The reaction of one British car executive to a question about Brexit was telling. He refused to answer the question, and reacted as if Brexit was a dirty word. Well, in a few years’ time, not only will the industry have to deal with questions and implications of Brexit, but also with its brutal reality.
• Adel Murad is a senior motoring and business journalist based in London.

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