Nearly 5 million Brits* have altered their car-buying plans as a direct result of Brexit, according to a new report published today by Close Brothers Motor Finance.
The report, Britain Under the Bonnet, looks at consumers’ attitudes and car buying behaviours – along with views from dealerships across the country – to give a comprehensive view of the UK’s automotive sphere in 2017.
According to the report, 71% (circa 28 million) current drivers are planning to purchase a car or replace their current vehicle in the next three years. However, 17% (4.7 million) of these have said that the decision to Brexit has made them more likely to purchase a used car, seek a cheaper model, or hold off on their purchase entirely – all of which could have a knock-on effect for the manufacturing industry, car dealers across the UK, and the wider economy.
The report comes at what is already an uncertain time for the future of the UK’s automotive industry, which currently employs 800,000 people and contributed £71bn to the economy in 2016 . In recent years, the industry has experienced a period of unprecedented growth, breaching records for manufacturing levels and car sales in 2016 .
However, there are concerns that the UK’s decision to leave the EU will result in the end of this golden period, with industry experts predicting an increasing cost of vehicles and a decline in manufacturing over the coming years. Nearly half (43%) of the UK’s car dealers surveyed for this report cited a potential recession as the biggest threat to their business. And investment in the industry has already taken a hit, dropping from £2.5 billion in 2015 to £1.66 billion in 2016.
Despite Brexit bringing with it significant challenges that the industry will need to navigate, the report does find cause for optimism – a majority (65%) of dealers surveyed said they expected their business to grow in 2017 and beyond. Interestingly, nearly half (42%) of dealers say their business is actually performing better than before the referendum vote, which runs parallel to the better-than-expected performance of the economy in general.
Commenting on the findings, Colin Tourick, Professor of Automotive Management, University of Buckingham Business School said:
The Britain Under the Bonnet report makes clear that Brexit is casting a shadow over the industry. Whilst we can hope that the economy won’t receive too much of a jolt from Brexit, the fact is that no-one knows what will happen. And economic uncertainty makes people wary of making major decisions – like replacing their cars.
James Broadhead, CEO of Close Brothers Motor Finance said: “The automotive industry is unquestionably one of the leading lights of the British economy, with turnover in 2016 totalling a record £71.6 billion. But despite having been an undeniable growth industry in recent years – with seemingly endless records set for car registration numbers – it’s difficult to dispute that we are entering into uncertain times for our industry, especially now Article 50 has been triggered.”
To find out more about the report click here.