Euro Policy Reshaping UK Auto Industry, Study Finds

Compiled By Jill Jusko The United Kingdom's decision to remain outside the euro zone will have a tremendous impact on its auto industry, with repercussions including a long-term decline in the manufacture of high-sales-volume models and the flight of suppliers to lower-cost economies, a new study finds. Global management consulting firm A.T. Kearney says the study's conclusions are based on economic modeling and interviews with leading industry experts. Key findings of the study include:

  • Manufacture of high-sales-volume models will decline as a result of excess capacity, a shift in the center of market demand eastward in Europe, and the UK remaining outside the euro zone. The UK will not see any new high-volume assembly plants, the report concludes.
  • Premium car manufacturers, such as Jaguar, Land Rover, and BMW, may take up some of the slack, benefiting from different economics, growing demand, and broader markets.
  • Suppliers will move to the euro zone or low-cost economies such as Poland and Hungary as a way to meet manufacturers' demands for lower costs and euro pricing.
  • The remaining UK suppliers must focus on the premium sector and meet the technological and quality standards required by those customers. The report notes that the UK is well positioned to grow its role as provider of specialist technical knowledge to the world's automakers.
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