Why are car sales down in Britain?

Great Britain has already begun to feel the results from the Brexit vote, both good and bad. One of the not so great results is that new car sales are down by about six percent in 2017 overall. That’s coming off a year in which the UK auto industry saw record sales. Who to blame for the down year is very clear, at least to Mike Hawes, CEO of the Society of Motor Manufacturers and Traders. He told CNN: “Obviously, consumer and business confidence has dropped since the [Brexit] referendum… 2017 has undoubtedly been a very volatile year, and the lackluster economic growth means that we expect a further weakening in the market for 2018.”

But is Brexit really to blame for the sharp downturn in British auto sales, or is that just a market correction after a particularly strong year?

In the months after the surprise approval vote to leave the European Union, British economic development stagnated. The value of the pound dropped, inflation rose, and wages could not keep up. This put the country into a bit of an economic holding pattern to see how these trends would level out. As it turned out, they haven’t. British consumers have less to spend, so they are spending less. That means businesses are hurting as a result. Worse, especially for automakers and manufacturers of other “big ticket” items, people are choosing to wait and save, rather than buy now.

In December alone, auto sales were down 17 percent as compared to the same time in the previous year. But industry leaders are not blaming all the bad news on Brexit. They say the government shares some of the blame. The British government has been talking trash about diesel and combining the negative rhetoric with higher taxes on diesel vehicles. That’s bad news when diesel vehicles make up about 40 percent of the British automotive market.

That’s not to say Brexit definitely didn’t play a role … it definitely did. Other EU nations are seeing good overall car sales, even as many countries are cracking down on emissions and greenhouse gases. That begs the question, will Britain be able to pull out of the slump this year, or will the British auto industry continue to falter? Mr. Hawes certainly feels he has his answer, but others are not so certain.

They believe Britain can come back. They just need better consumer PR and a little less “help” from the government.

Ronn Torossian is the Founder and CEO of the New York based public relations firm 5WPR: one of the 20 largest PR Firms in the United States.

Ronn Torossian is the Founder and CEO of the New York based public relations firm 5WPR: one of the 20 largest PR Firms in the United States.

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