Cars may become costlier to make, expensive to buy

Source: Xinhua | 2019-03-04

The usual mix of sports cars, offroaders and family saloons will be on display at the Geneva motor show this week, but with one big difference from previous years — they may be about to become harder and costlier to make, and more expensive to buy.

If Britain leaves the European Union on March 29 without a withdrawal deal, all bets are off on what will happen to the just-in-time production system on which the European auto industry relies, or to demand for vehicles across the continent. And the situation has just got more complicated. Last week, British Prime Minister Theresa May raised the prospect of a short delay to Brexit, potentially disrupting the plans that carmakers have put in place to cope with a no-deal divorce.

“I’m sure I speak for most of the country when I say, we just want to get it done. We just want to know where we are and get on with it,” Andy Palmer, chief executive of British sports car maker Aston Martin, said. His company has said it will spend up to 30 million pounds (US$40 million) on preparing for a potentially disorderly Brexit, including stocking more components and potentially flying in parts if ports are clogged up.

Britain is Europe’s second-biggest buyer of cars and fourth biggest manufacturer, meaning disruption to supplies — and possible tariffs of up to 10 percent on vehicles moving between Britain and the European Union — will have repercussions across the industry.

The timing could hardly be worse for a car industry already struggling with a slowdown in China, the world’s biggest autos market, a plunge in demand for diesel vehicles and costly investments in electric as well as self-driving cars.

But carmakers cannot suddenly stop plans which have been years in the making. British supercar maker McLaren will display its Speedtail in Geneva, while fellow British luxury brand Bentley will show off the Bentayga Speed and Aston Martin its Lagonda all-terrain concept vehicle.