Photo: Public Domain Pictures, edited by autoevolution
For most non-British folks, Brexit came and went, and probably not that many people are still thinking about it nowadays. Except for the Brits, of course, who are going to be reminded of their June 2016 vote to exit the European Union for quite a few years from now.
I'm not going to talk about the terrible political repercussions of the said vote, though, because most of our readers don't really care about that anyway. That said, Brexit will also take a heavy toll on the not-exactly-burgeoning automotive industry in the United Kingdom.
As most of you are aware, the once-flourishing car giants in Britain are now either dead, shadows of their former selves or have since been engulfed by foreign carmakers and/or investors. What about McLaren, Aston Martin or small timers like Morgan or Caterham, you will say?
Well, the Bahrain Government Holding Company owns 57 percent of McLaren Automotive, Italian private equity fund Investindustrial owns the majority of Aston Martin shares, Malaysian entrepreneur Tony Fernandes owns Caterham and Morgan are not exactly selling millions of cars, so they don't really matter in the big picture. In other words, there is not a single British carmaker, of reasonable size, that is still 100 percent British.
Is that a problem for anyone? I think not, excepting maybe for those die-hard nationalists that hate immigrants and only want to buy British products. There's only but a few of those, though. Not to mention that despite their foreign ownership, almost all these carmakers still manufacture their products mostly in the UK.
In other words, everything is going swell, or should I say was going well, for the not-so-British automakers. After the UK finishes its transition from being a European country to becoming a state that's part of… the Atlantic Ocean, things will definitely take a turn for the worse when it comes to the big-time players of its automotive industry.
A couple of weeks ago, Nissan said that it would halt all investment in Britain if the Government doesn't compensate the carmaker for the extra taxes that UK-built cars will have to face in the future.
Upon hearing that, Jaguar Land Rover's Chief executive said that his company will have to realign its thinking when it comes to investment as well if Nissan is the only one that gets Government compensation. “We are the only car manufacturer in the UK to do all the work in terms of research, design, engineering, production planning in the UK. We want to have fair treatment and a level playing field at the end of the day.”
From this perspective, Tata Motors subsidiary JLR might actually emerge as the biggest loser after Brexit, unless something truly unexpected happens next. With the UK Government having to either compensate dozens of smaller or larger companies or let them struggle with import taxes in the EU by themselves, the situation for Jaguar Land Rover doesn't look too optimistic.
Not taking into account their stellar brand image, neither Jaguar nor Land Rover are key players in the automotive industry when it comes to sales. Heck, their best year ever happened in 2015, when they sold 487,065 vehicles combined. For the record, Dacia sold 550,090 cars over the same period, and the Romanian Renault subsidiary only has five distinct models. Despite JLR still being considered British, they even lag behind foreigners like Mercedes-Benz in their own country.
With all this being said, and the Brexit prognosis being rather negative on the long run, wouldn't it be better for JLR to jump over the English Channel and set its factories somewhere in Europe? I've heard Germany has a pretty developed car industry, with lots of qualified workers and plenty of automotive suppliers.
Sure, it would need a humongous investment, but I'm quite sure that the benefits would ultimately outweigh the downsides. Not to mention that it wouldn't actually be that big of a deal regarding production lines; remember, Dacia sells more cars than Jaguar and Land Rover combined, and most of them are built near a small Romanian city.
How would you feel about the quality or image of a Jag built in Bavaria versus one built in Solihull, or compared to one made in Pune, India? Yeah, they already have an assembly plant in Pune since 2011.
Sure, the R&D and even the headquarters could very well remain in the UK, thus keeping JLR “as British as ever.” For example, Infiniti builds mainly for the U.S., it's a Japanese brand and yet its headquarters are in Honk Kong, so this type of operation isn't really such a big deal.
JLR could go as far as poach some bright engineering minds from its new neighbors from Daimler, BMW or the VAG Group, and this scenario would be made much easier if said minds don't have to move to rainy UK.
I'm pretty sure that I'm not the first who has thought about this, especially after the Brexit vote, but I'm curious how the vast majority of JLR fans, British or not, would react to such a radical change.
As most of you are aware, the once-flourishing car giants in Britain are now either dead, shadows of their former selves or have since been engulfed by foreign carmakers and/or investors. What about McLaren, Aston Martin or small timers like Morgan or Caterham, you will say?
Well, the Bahrain Government Holding Company owns 57 percent of McLaren Automotive, Italian private equity fund Investindustrial owns the majority of Aston Martin shares, Malaysian entrepreneur Tony Fernandes owns Caterham and Morgan are not exactly selling millions of cars, so they don't really matter in the big picture. In other words, there is not a single British carmaker, of reasonable size, that is still 100 percent British.
Is that a problem for anyone? I think not, excepting maybe for those die-hard nationalists that hate immigrants and only want to buy British products. There's only but a few of those, though. Not to mention that despite their foreign ownership, almost all these carmakers still manufacture their products mostly in the UK.
In other words, everything is going swell, or should I say was going well, for the not-so-British automakers. After the UK finishes its transition from being a European country to becoming a state that's part of… the Atlantic Ocean, things will definitely take a turn for the worse when it comes to the big-time players of its automotive industry.
A couple of weeks ago, Nissan said that it would halt all investment in Britain if the Government doesn't compensate the carmaker for the extra taxes that UK-built cars will have to face in the future.
Upon hearing that, Jaguar Land Rover's Chief executive said that his company will have to realign its thinking when it comes to investment as well if Nissan is the only one that gets Government compensation. “We are the only car manufacturer in the UK to do all the work in terms of research, design, engineering, production planning in the UK. We want to have fair treatment and a level playing field at the end of the day.”
From this perspective, Tata Motors subsidiary JLR might actually emerge as the biggest loser after Brexit, unless something truly unexpected happens next. With the UK Government having to either compensate dozens of smaller or larger companies or let them struggle with import taxes in the EU by themselves, the situation for Jaguar Land Rover doesn't look too optimistic.
Not taking into account their stellar brand image, neither Jaguar nor Land Rover are key players in the automotive industry when it comes to sales. Heck, their best year ever happened in 2015, when they sold 487,065 vehicles combined. For the record, Dacia sold 550,090 cars over the same period, and the Romanian Renault subsidiary only has five distinct models. Despite JLR still being considered British, they even lag behind foreigners like Mercedes-Benz in their own country.
With all this being said, and the Brexit prognosis being rather negative on the long run, wouldn't it be better for JLR to jump over the English Channel and set its factories somewhere in Europe? I've heard Germany has a pretty developed car industry, with lots of qualified workers and plenty of automotive suppliers.
Sure, it would need a humongous investment, but I'm quite sure that the benefits would ultimately outweigh the downsides. Not to mention that it wouldn't actually be that big of a deal regarding production lines; remember, Dacia sells more cars than Jaguar and Land Rover combined, and most of them are built near a small Romanian city.
How would you feel about the quality or image of a Jag built in Bavaria versus one built in Solihull, or compared to one made in Pune, India? Yeah, they already have an assembly plant in Pune since 2011.
Sure, the R&D and even the headquarters could very well remain in the UK, thus keeping JLR “as British as ever.” For example, Infiniti builds mainly for the U.S., it's a Japanese brand and yet its headquarters are in Honk Kong, so this type of operation isn't really such a big deal.
JLR could go as far as poach some bright engineering minds from its new neighbors from Daimler, BMW or the VAG Group, and this scenario would be made much easier if said minds don't have to move to rainy UK.
I'm pretty sure that I'm not the first who has thought about this, especially after the Brexit vote, but I'm curious how the vast majority of JLR fans, British or not, would react to such a radical change.
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