Auto Industry Confidence Remains High Despite Brexit
A global survey of professionals across four industries – including automotive – shows that global auto industry confidence is holding up, despite some reduction in business optimism following the UK referendum vote to leave the EU.
When asked to rate confidence in prospects for the global automotive industry 3-12 months out, on a scale of 1-10, auto industry respondents averaged a score of 6.4, significantly ahead of the three other industries (the drinks, food and apparel industries) polled in the survey.
A similar result was evident on medium- and long-term prospects (3-5 years out), with auto coming out more positive overall than the other industries surveyed. However, there was more pessimism evident from automotive non-UK European respondents (scoring just 5.7 out of 10), a confidence rating that was slightly below that of the drinks and food industries. Analysis of Brexit impacts on the automotive sector has tended to focus on adverse market impacts and potential disruption to EU-UK trading relations and auto supply chains in Europe.
The survey also showed that confidence in short-term prospects for the global auto industry has been dented over the past three months. While almost 50% of respondents said there was no change in how they feel about prospects for the next year from three months ago, over a third said that confidence had been reduced. A slightly higher proportion of respondents said that confidence was reduced on medium- and long-term prospects.
The survey also confirmed a widespread belief that the full consequences for the global auto industry of the UK decision to leave the EU will take a number of years to become clear. Almost half of respondents expect the full consequences to be understood after a period of two years. However, British respondents were notably more pessimistic on how long it could take. Almost 40% of respondents from the UK expect that the period for the implications of Brexit for the global auto industry to be fully understood will be five years (compares with 20% in the rest of the world). Some 7.4% of UK respondents think it could take ten years or more.
“The survey results point to some initial adverse reaction,” said Dave Leggett, just-auto’s editor. “And confidence in the auto sector has undoubtedly been dented since the referendum result last month. Sterling has depreciated significantly and there are signs of an economic adjustment ahead in the UK. However, the global picture for the auto industry remains pretty positive, with market growth in the US, China and Western Europe this year. Forecasts point to the global vehicle market expanding once again to a new record in 2016, approaching 95m vehicles. Our survey confirms a need for some perspective on the global picture for an industry that is still growing.
“Also, it is clearly going to be some time before the impact of Brexit on the auto industry – especially in the UK and Europe – becomes clear. We’ll be following this survey up to see how attitudes change.”
Some of the key points from the Brexit survey
– Confidence in short-term prospects (3-12 months) for global auto industry higher than for other three industries surveyed.
– However, confidence in short-term prospects for the global auto industry has been dented over the past three months with over a third saying it has been reduced.
– The survey confirms widespread belief that the full consequences for the global auto industry of Brexit decision will take a number of years to become clear.
– Almost half of all respondents expect the full consequences to be understood after a period of two years, with some 40% of UK respondents expecting it to take five years.