Ever since the people of Great Britain voted to leave the European Union (EU), everyone on the planet who has anything to do with the global market has been scrambling. Professionals from every industry are wondering whether or not this surprising turn of events will have an impact on their business.
While it is unlikely that Britain's break with the EU will have an immediate impact on your store, there is a chance that this significant divorce may bring changes to the American auto industry. And these changes might eventually affect your dealership in some way, shape or form.
The Auto Industry in Europe
Brexit is bad news for the automotive industry in both Britain and the remaining EU countries. Great Britain represents Europe's second-largest car market and EU countries buy the greatest proportion of the vehicles produced in the United Kingdom. With this in mind, experts predict that sales will fall and costs will rise throughout the U.K. and the rest of Europe.
Moving across the pond, it turns out that Brexit isn't great for American automakers that export to Europe either. Ford and General Motors may really take a hit because they are already struggling for profitability in Great Britain. And, obviously, trying to sell cars in a region with an uncertain economic climate is going to be a lot harder.
About this issue, Ian Fletcher, principal analyst for IHS Automotive stated, "We're taking a chunk out of the sales forecast so the two biggest sellers in the country, Ford and [GM's] Vauxhall, will likely be affected the most."
Why are automakers and leaders in other industries scrambling right now? They were caught off-guard because most experts predicted that Britain would remain with the EU. For the majority of people who were closely following the Brexit vote, the actual Brexit came as a huge surprise.
A bewildered Tony Walker, deputy managing director of Toyota's U.K. car-making operations said, "We hadn't planned for Brexit. No one had. We were all expecting a narrow vote for 'Remain.' Even the bookies said that, and they're never wrong."
Well, for once the bookies were wrong and the potentially painful Great Britain/EU separation process has begun. Right now, carmakers are trying to push a deal through with the EU that would allow them to retain their current access in the market. However, it is unlikely that this deal will move forward without some considerable glitches.
The American Auto Industry Moving Forward
There are still a lot of unanswered questions such as: Will other countries vote to leave the EU? Will Scotland leave the U.K. and stay with the EU? Finally, Will British citizens demand a Brexit re-vote? In the meantime, however, there is a push in the U.S. to keep things "business as usual."
- In the face of global economic turbulence, it is unlikely that the Fed will raise interest rates again anytime soon.
- Automakers that do business in Europe may eventually be forced to rethink supply chains and factory locations, but they are currently in a holding pattern.
- It is unclear how much Brexit will affect the American economy long term. And, for right now, consumer confidence in the U.S. seems to be holding fairly steady.
So, what does all of this mean for your store? It means that you should continue doing what you do best. Sell as many cars as possible, promote your service department and build great relationships with customers so that they'll keep coming back to you.
It's "business as usual," and there's no reason why business, at least for the time being, shouldn't be good.
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