The Brexit will mean less work for Opel in Germany

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Vauxhall Corsa, the second best selling car in the United Kingdom

The consequences of Brexit begin to be felt in the european automotive industry. The european branch of General Motors is primarily made up of Opel and Vauxhall (in the Uk). The country that most contributes to the accounts of GM Europe is Uk, first because it is the country where more cars sold, second because the pound is strong against the euro. Correct, was.

From may to today, the pound sterling has fallen from 1.3 euros to 1.15 euros

The lower the price of the pound, sales return less euros and fewer dollars, as it has been devalued in the wake of the vote in favor of breaking with the European Union by a simple majority. On the contrary, as almost all cars are imported to the Uk from the continent, there is a lot of dependence on the level of sales.

May was the first warning, a year-onyear growth of 2.5 per cent. In June 2016 we observed a decrease in small, but relevant, 0.8% less of sales, as compared to 2015. July has maintained the level of last year, with a growth of 0.1%. The numbers indicate that the uk market has been stuck by the economic uncertainty.

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Vauxhall Insignia, a car that was very common in fleets of company (in the image, the VXR, is equal to the OPC of Opel)

Two of the best selling models of Opel in Europe are the Opel Corsa and the Opel Insignia

Uk is the most important market for both models. The lack of demand implies that there is not to manufacture so many cars, so there will be work stoppages in the factories in Ruesselsheim and Eisenach. For how long? The company does not know, will depend on a lot of the demand for british.

last month, we learned that General Motors was the potential impact of Brexit on their accounts, if nothing changes, $ 400 million in the second half of the year, eclipsing the profit of the first half. Were it not for the Brexit, this year General Motors Europe would have gotten its first annual profit since 1999. Announced corrective measures, and this is the first of which we have news.

The Corsa and the Insignia are good indicators of how things are going, because they are models that are bought a lot in channel companies (for fleets and alquiladoras). If companies do not see the situation clearly, do not engage in investments of this type. it is not Yet known when it will result in the effective output of the European Union. British politicians are trying to delay it to 2019, and the European Commission wants it “already”.

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The new Vauxhall Astra is having a sales very important, the best in more than two years

The Insigna and Corsa are manufactured in Germany. In Spain, they manufacture several models that have as the destination the export to the Uk, as the Opel/Vauxhall Meriva and Mokka. We still don’t have that to talk about possible work stoppages in Spain, but it is an option not to be ruled out. General Motors will absorb the impact of up to $ 400 million.

In Ruesselsheim and Eisenach, employ some 5,000 people

In the medium term, the plants most likely to suffer the negative consequences of Brexit are in the Uk. We refer to Ellesmere Port (Astra) and Luton (Vivaro and company). If the pound does not raise his head and over reappear-tariff barriers by the loss of status preference of Uk with the EU, these factories could end up shutting down.

Others, such as Ford, which has already shut down facilities, or as Nissan and Toyota, which have their plants to stop working, you’ll notice the effects in a lesser extent. A weak sterling favors export to the continent, because you have to pay less euros, but hurts the import of both cars and components. the United Kingdom is the second country that most car purchases in the EU.

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Other manufacturers think of reducing the impact of Brexit raising the prices in pounds sterling to maintain the profit per unit. The problem with doing that is that you lose competitiveness with respect to the trademarks that the prices remain stable, or rise by less. Everything is very recent, and many do not know what to do.

Both Insignia Corsa are models that are stretching everything possible in their lives commercial. The Corsa E is an evolution of the Corsa D, which started to sell in 2005. As for the Insignia, was launched in 2008 and hopes soon to a generational replacement. In fact the problems of the Badge in the Uk we must add the decline of the traditional segment of sedans middle (segment D) due to the rise of the compact SUVS and the pressure of the Premium German.

Of time Ruesselsheim and Eisenach are only going to reduce work hours, we do not speak of measures that are most painful, such as layoffs or you Are. The car industry likes a lot of financial stability and policy. Right now in the Uk there is too much neither one thing nor the other. At least the european market, continental continues to grow, so that in the medium term GM Europe will again give benefits are a lot of security.