The big auto manufacturers emerged from 2018 with deep wounds as they struggled with a huge slump in European diesel car sales, a slowdown in Chinese purchases and a tough transition to a new EU emissions-testing system.
This year could be even worse. In 2019 they’ll have to deal with the threat of a disorderly Brexit in March and the risk that US president Donald Trump could slap 25% tariffs on European cars and parts. Plus, the Chinese slowdown and diesel slump aren’t going away.
“I expect there to be further job losses across the industry,” David Bailey, professor of industrial strategy at Aston University, told Yahoo Finance UK.
Honda (HMC) also raised alarm bells on Thursday by saying it would shut down its British operations for six days in April to cope with any potential disruptions from Brexit. Fellow carmakers Mini and Rolls-Royce are doing the same.
Experts are warning that the threat of major trade disruption is deeply worrying.
“We’re expecting a modest contraction of European production this year. But things could [get] a lot worse. We’ve got potential Trump tariffs, a potential hard Brexit and weakness in China, which could make things even worse,” warned Justin Cox, an auto sector expert and director at LMC Automotive in the UK.
Cox predicts that car manufacturing across Europe will decline by about 1% this year compared with 2018 if the current trends continue. A messy Brexit and new Trump tariffs would all but guarantee a damaging downward spiral and the potential for more job losses, he said.
On top of all this, Bailey said car manufacturers are feeling pinched as they push more money into developing electric technologies and autonomous cars.
“Investing in new technology is further squeezing things,” he told Yahoo Finance UK. “They’re going to have to invest a lot more, which is expensive.”
The shift to electric technology means more high-tech jobs in the car industry, but cuts to traditional manufacturing jobs, he warned. Electric car production simply does not require as many workers, he said.
Benny Daniel, a mobility expert and vice-president at the market research firm, Frost & Sullivan, is also warning that 2019 could be a bleak year for the industry.
“We expect Europe to be stable at best. There is no optimism for further growth,” he said.
Over 13 million people in the European Union work in the automotive sector, which works out to about 6.1% of the employed population, according to the latest statistics from the European Automobile Manufacturers Association.
The UK car industry employs roughly 856,000 people, according to data from the Society of Motor Manufacturers and Traders (SMMT).