What’s Driving Automakers Out of Europe?

Oli Scarff/Agence France-Presse — Getty Images

Automakers, in quick succession, have moved in recent weeks to end parts of their operations in Europe. Nissan is the latest: On Tuesday, it confirmed that it would cease assembling Infiniti cars at its plant in northeast England.

The moves, during Britain’s wrenching debate over its departure from the European Union, known as Brexit, have raised the question: Is Brexit forcing the carmaking industry out of Britain?

It’s not quite so simple. Traditional car manufacturers, in Britain and in Europe over all, have been buffeted by forces around the world, and they assess where they want to make the next model of a car every few years or so.

As automakers allocate resources, they have been balancing the need to respond to these changes with the justifications for producing cars in places like Britain.

Here are some of the forces reshaping the industry.

Who is moving?

  • Honda said it would close its plant in Swindon, England, by 2021 and stop making one of its sedans in Turkey. The Swindon plant employs 3,500 and the Turkish plant about 1,100.

  • Nissan reversed an earlier decision by deciding to produce the next generation of its X-Trail sport utility vehicle in Japan instead of Sunderland, England. Its luxury brand, Infiniti, is withdrawing from Western Europe altogether.

  • Ford said in January that it would cut thousands of jobs across Europe.

  • Jaguar Land Rover announced in January that it would be cutting 4,500 people from its global work force; most of the cuts are expected to be in Britain.

  • Dyson, which is developing an electric car, moved its headquarters from Britain to Singapore the same month.

  • General Motors pulled out of Europe in 2017, selling the Opel and Vauxhall brands.

Regulation of fossil fuels has tightened

In the wake of Volkswagen’s diesel-cheating scandal in 2015, when it used software to trick emissions tests, awareness of the harmful effects of fossil fuels has prompted stricter regulation throughout the Continent.

Some German cities are banning older diesel engines in an effort to reduce pollution in urban areas. London has initiated a levy on drivers of older diesel vehicles. Britain and France plan to phase out sales of new diesel and gasoline-powered cars by 2040.

In the meantime, more governments, drivers and carmakers are pivoting to electric vehicles. Cars running on alternative fuels made up 6 percent of new car registrations last year in Europe, up from 4.8 percent in 2017, according to JATO, an auto industry research firm.

Norway is aiming to sell only electric cars by 2025, while India is aiming to be all electric by 2030.

Carmakers are racing to respond. Volkswagen said Tuesday that it intended to sell 22 million electric cars over the next 10 years, compared with its previous goal of 15 million, and that the company would aim to be carbon neutral by 2050.

The investments necessary for building electric cars have added to cost pressures for automakers that, in some cases, have…

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Peter Bordes

Exec Chairman & Founder at oneQube
Exec Chairman & Founder of oneQube the leading audience development automation platfrom. Entrepreneur, top 100 most influential angel investors in social media who loves digital innovation, social media marketing. Adventure travel and fishing junkie.
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