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If Vauxhall stops making cars in the UK, will the car industry's great Brexit fear turn to outright panic?

LUTON, ENGLAND - MARCH 06: Logos are displayed on an advertising banner at a Vauxhall factory on March 6, 2017 in Luton, England. French car giant PSA Group have announced today the acquisition of General Motors' European, which includes the Opel and Vauxhall brands for 2.2 billion euros (GBP 1.9bn). The sale includes UK based Vauxhall which has assembly plants in Luton and Ellesmere Port. (Photo by Carl Court/Getty Images)
Vauxhall is proud of its British heritage, but will this advertising hoarding continue to hold true? Credit: Car Court/Getty Images

So. Farewell, then, Vauxhall. If its owner PSA Group does as it suggests it might and transfers production of its top-selling Astra family hatchback from Ellesmere Port in Cheshire to southern Europe in the event of a no-deal Brexit, it signals that the car industry's long-held fears are gradually turning to panic – if not the demise of a proudly British marque. 

By implication – and even more of a concern – is the prospect of other manufacturers scaling down their production in the UK and perhaps even withdrawing it altogether.

The industry's biggest fear has always been that if the UK leaves the EU without a deal, customs checks on vital parts and assemblies from Europe could cause delays and production chaos. Not to mention the risks of tariffs on imports and exports.

The car industry has been a persistent, vocal advocate of the dangers of no deal to manufacturing in this country. Is there still time to heed its warnings, or is it too late?  

In a letter to new Prime Minister Boris Johnson last week, Mike Hawes, the chief executive of trade body the Society of Motor Manufacturers and Traders (SMMT), attempted to be optimistic as he outlined the industry's greatest fears, but his letter finished: "We cannot, however, continue to deliver these benefits [generation of wealth and employment], or take advantage of new opportunities, if the UK leaves the EU without a deal. A no-deal Brexit presents an existential threat to our industry.

PSA Group chairmen Carlos Tavares has defended Vauxhall's Ellesmere Port factory, but circumstances may render it unprofitable Credit: ERIC FEFERBERG/AFP

"We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production, as well as further undermining international investors’ confidence in the UK. We need a deal with the EU that secures frictionless and tariff free trade. No-deal Brexit is simply not an option."

As have all car manufacturers in Britain, PSA boss Carlos Tavares has fiercely defended Vauxhall's UK factories but sooner or later there is a chance that the economics simply won't stack up and that production of volume models will simply become unprofitable.

The travails of Jaguar Land Rover (JLR) have been well documented, and despite having built a factory in Slovakia in which to produce the new Land Rover Defender the company is pretty much tied to production in the UK.

BMW has stood by its factory at Oxford but has also voiced its fears of no deal for car manufacturing

BMW has repeatedly said that production of its Mini range in Oxford is at risk, due firstly to uncertainty and more recently to the increasing threat of tariffs and customs checks.  

Who else? Oh, right, there aren't any other "British" marques left in the volume sector. That leaves the Japanese firms, which have prospered from the skills of British workers and the frictionless borders that enable them – along with pretty much every modern car factory – to employ "just-in-time" production processes that avoid having to hold vast stocks of the myriad parts required to make a car.

Although keen to stress that Brexit was not the most significant factor in their decision-making, Honda has already planned to close its Swindon factory, Toyota said in February that it could be forced to suspend production in Derbyshire if the UK leaves the EU without an agreement and Nissan has decided against building its next X-Trail SUV at its highly efficient Sunderland factory. 

Honda announced earlier this year that it will close its factory in Swindon, which makes Civic hatchbacks for export globally, in 2021 Credit: Asahi Shimbun/Getty Images

Ford? It hasn't produced a car in the UK since 2002.

I sincerely hope that it is not the end, or even the beginning of the end, for an industry that contributes £18.6 billion to the UK, employs hundreds of thousands of people and flies the flag for UK manufacturing during a time of unprecedented change.

To quote the SMMT's Hawes: "In short, when automotive succeeds, so does the UK." 

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