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Brexit: Car investment halved as "red warning"

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Investments in the automotive sector in the United Kingdom halved nearly last year and production has declined, as Brexit's fears put firms on "red notice", the industry's trade body said.

Internal investment fell 46.5 percent to 588.6 million pounds last year from 1.1 billion pounds in 2017, according to the Association of Motor Manufacturers and Traders (SMMT).

Production fell by 9.1% to 1.52 million vehicles, with a UK exit and a decline in exports of 16.3% and 7.3%, respectively.

Brex's uncertainty "has done tremendous damage," said SMTT chief Mike Hoyce.

But so far, the impact on production, investment and jobs has nothing to do with the continuing destruction caused by the breakdown of our trade links without interruption overnight, not only with the EU, but with many other global markets that we are currently trading freely " , he added.

"With less than 60 days before we leave the EU and the risk of falling without a contract is more realistic, UK Automotive is on a red alert," he said.

Politicians must do everything necessary to avoid a non-contract, he said.

His bleak prognosis follows strong warnings from other business groups on Wednesday. Caroline Fernnbern, CBI's general manager, said Tuesday's voting on re-negotiating a UK withdrawal deal "feels like a real throw of the cubes".

Steven Kelly, chief executive of Production Northern Ireland, told the BBC that the companies were "in despair and really confused" about what was going on.

Mr Hoyce said that, despite the Commons vote Tuesday night, "nothing has changed."

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Analysis: Simon Jack, business editor of the BBC

Investments in the automotive industry come in unequal lumps, as old models are retired and new over time. But even allowing this, entering a new investment revealed this morning is sharply.

In 2015, car manufacturers invested £ 2.5bn in the UK. Since then it has fallen so far and in 2018 it amounted to only 589 million pounds.

Brecht's uncertainty was not the only issue the sector was facing – the confusion over diesel policy, the drop in sales in China, and the retention of production due to the new regulations also acted.

But SMMT was clear that Brescot presented what it calls "the most significant threat to the competitiveness of the UK automotive sector in generation."

Manufacturing firms that rely on fine-tuned pan-European supply chains have perpetuated warnings about the dangers of a non-contracted Brexit. These numbers will not do anything to change that.

"Substantial threat"

The fall of 16.3% in the production of cars intended for sale in the UK was driven by the uncertainty about the future of diesel, regulatory changes and the decline in consumer and business sentiment, according to SMMT.

However, exports to the EU declined by 9.6%, less steep than the decline in domestic production.

In total, the EU is still responsible for the vast majority of UK exports, 52.6% or 650,628 cars. Although exports to the United States rose by 5.3%, largely due to the demand for premium models, Mr Hoyce warned that this improvement could be altered if tariffs for tax changes after BREX are imposed.

Other key markets outside the EU will also be hurt, he said. Exports last year in Japan rose 26% and 23% in South Korea, but he indicated that the two countries were subject to preferential trade agreements with the EU.

Exports to China dropped by 24.5%. Jaguar Land Rover (JLR), the UK's largest automaker, has already highlighted the pain felt by the slowdown in China's sales.

Turn off the JLR

Earlier this month, JLR confirmed that it cuts 4,500 jobs, charging Brexit's uncertainty, the decline in diesel sales and the economic slowdown in China.

The carmaker also said it would resume the annual stoppage in April for an additional week amid concerns that supplies in a timely manner could be disrupted if the UK leaves the EU without an agreement.

Mr Hoyce noted that the fall in production last year fell in 2017, which occurred after a seven-year unprecedented growth, as the sector emerged from a recession.

"As a highly integrated sector that maximizes the benefits of a European single market and a customs union, Brexit" without a contract "is the most significant threat to the competitiveness of the UK automotive sector in a generation," he said.

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