11 March 2017

The Car Industry Bully Boys - Part Two

The UK sourced Honda Civic Hatch Stateside

This is a two part series. If you haven't read Part One, it sets the scene for this Part Two. To view that one first, simply click here. In part one, I looked at the pressure UK car maufacturers are trying to exert. I ended the article by asking why aren't European car makers not pressuring the EU to forget about a tariff they have raised and threatened with? There could be several reasons.

One is that the EU is fearful that the union may disintegrate due the the UK's imminent departure. Other countries may decide to leave too and that would create much change. Business hates disruption as it leads to uncertainty and the car industry doesn't want to go there. Trying to bring the UK to heel is deeded the best way to retain the status quo.

Another reason is that the UK simply doesn't have enough component manufacturers. Most are imported so a lower pound costs. A solution would be increase component making in the UK. That would be initially costly and in some cases economies of scale would be lost in the factories where the components are currently made.

Also most UK car makers are importers of fully built up cars as well, in many cases the majority of what they sell in the UK is imported. It has been cheaper to import into the UK with its historical over valued currency. Sterling is down so no longer better to import. Many car makers already have ample capacity, so they won't want to open UK plants. However, that may be a tempting solution if the present currency rate remains.

I cannot recall such public outpourings of negativity from an industry in trying to change political direction. Stand over tactics may work in some countries but I don't see it happening here. What it does do is make the car manufacturing industry in Europe look like bullies and rather pathetic ones at that. They are used to getting their way and can get nasty if they don't. Just as you would expect from any self respecting bully.

PS. Some car makers have been upbeat about the lower pound. Both Aston Martin and Mclaren have said it has been good for the bottom line. Honda’s Swindon factory is capitalising on a lower pound, which has lifted exports of its British built Civic hatchback to the USA and other international markets including Japan. For more on Honda's positive attitude, simply click here.

Picture source: Netcarshow.

Honda is one of a few manufacturers upbeat about UK manufacturing

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