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Car sales will tumble if UK leaves EU, says report

Published 15/06/2016

Brexit would result in a recession, which would hit car sales, a study has claimed
Brexit would result in a recession, which would hit car sales, a study has claimed

UK car sales will decline "over the next few years" if there is a vote to leave the EU, according to a report by the Economist Intelligence Unit (EIU).

The research firm predicted that Brexit would result in a recession in 2017 and "no car company will benefit from that".

New car sales reached an all-time high of 2.6 million in 2015, up 6% on the previous year.

The EIU report warned that a Leave vote on June 23 would lead to a "tumble" of sales as "economic stagnation weights on consumer sentiment" and the commercial market is "subdued".

It went on to say that Brexit would initially lead to "substantial disruption" over regulations, which could have an impact on product specifications and employee rights.

Although many manufacturers have expressed a desire for a cut in red tape, those who still want to sell to the EU would "think twice about making product changes", according to the study.

The report did state that there were some p ossible advantages for the automotive industry in the event of a Leave vote on June 23.

It noted that the UK is "a sizeable market in its own right" and new trading opportunities could emerge if it becomes easier to negotiate agreements.

Making it harder for foreign-based manufacturers such as Volkswagen to sell in the UK would help domestic producers, the report said.

It added that Toyota, which has plants in Derbyshire and North Wales, has announced it has no plans to leave the UK following a vote for Brexit, while Honda has stayed "non-committal on the issue".

But the EIU concluded: "The biggest question, however, is over what would happen to the economy after a vote to leave.

"Our prediction of a 2017 recession would almost inevitably mean a slide in UK vehicle sales over the next few years.

"No car company will benefit from that, regardless of the longer-term arguments."

In March the Society of Motor Manufacturers and Traders published a survey of companies involved in the UK motor industry which found that 77% believe a vote to remain in the EU would be best for their business, while only 9% felt Brexit would be better.

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