Last February, I wrote an article about the consequences of a (then potential) Brexit for the auto makers who produce cars in the UK. Now that the British people have actually voted to leave the European Union, let’s see how the result of the upcoming break-up may influence the sales rankings in the European car market in the second half of 2016. I’ll first start with clarifying that even when the split-up is completed, which is expected to take at least 2 years, we at Left-Lane.com will continue to include UK car sales data within our EU reports, as these include the countries with which the EU has a free trade agreement (p.e. Switzerland and Norway), and we’ll have to assume that such an agreement will be struck with the UK as well. Of course, with the vote taking place June 23rd, the effects won’t be fully visible yet in the June sales figures, not in the least because there’s always a delay of a few weeks between a customer order and the actual delivery (and registration of a “sale”) of a car. However, the uncertainty preceding the actual vote may have caused private buyers to at least postpone their purchase, as the UK market, which grew by 3,2% in the first half of the year, stabilized at -0,8% in June and +0,1% in July.
Contrastingly, while the rest of Europe was in a sales crisis, the UK has been one of the strongest markets in Europe in recent years, breaking sales records year after year as a result of low interest, a booming housing market and carmakers willing to offer good deals in one of the very few markets with an actual demand. However, the financial uncertainty of the coming few years during the break-up with the EU, combined with a depreciating British Pound are likely to stall that growth in the short and mid-terms, and analysts expect a decline of the British car market this year and next. In contrast, Southern European car markets had been hit exceptionally hard with a huge drop in sales after the global financial crisis since 2008, and they’ve only just started to accelerate their recovery from their rock-bottom crisis levels. Italy, Spain and France have been among the fastest growing countries in Europe in recent months, showing double digit gains over 2015 volumes. But the Brexit vote is also expected to temper those recoveries, as analysts have lowered their predictions of growth for the second half of 2016 for all of Europe, as the decline in the UK will not only influence the figure for the entire market, being the second-largest of the continent, but the uncertainty that comes with the break-up will also slow down growth in the rest of Europe. [Read more…]