New cars sales projected to sharply drop following Brexit image

Analysts are expecting the Brexit move to trigger a serious sales drop in the United Kingdom in the coming years.

As United Kingdom decided to leave the European Union, the automotive market will surely enter into a period of uncertainty and instability. Automakers are on the verge of losing billions of dollars, as analysts are now seeing some gloomy years ahead in term of car sales. Global research agency LMC Automotive readjusted downwards its previous forecast for the UK, predicting a 120,000 drop in sales this year and about 400,000 in each of the next two years. “With an effective increase in prices due to sterling depreciating, lower economic growth forecasts and weaker confidence, we have lowered our forecast for light vehicle sales in the UK,” LMC said. On these grounds, UK light vehicle market is expected to reach 2.55 million units in 2018, down from the projected 3.0 million units earlier this year.

According to data from the Society of Motor Manufacturers and Traders, UK new car registrations for 2015 beat 2.6 million units for the first time – 6.3 percent rise, sealing four years of consecutive growth in Europe’s second-biggest car market after Germany. British manufacturers made more cars in 2015 than any year since 2005, as they produced 1,595,697 vehicles, with 77.3 percent of the total going for export. Europe was the UK’s biggest trading partner accounting for 57.5 percent of all car exports.

“This is not a good day for Europe -and in my view, certainly not for the U.K.,” Daimler CEO Dieter Zetsche said in a statement after the vote. “Geographically, the country may be an island; politically and economically, it is not.” Analyst firm Evercore ISI also cut its UK sales forecast through 2017 by 14 percent and said Brexit could impact the automaker’s earnings by more than 8 billion euros (8.9 billion dollars) in the next two years.

Via Automotive News