Why Tire Industry Shakes after Brexit?

The British voted to leave the European Union in a referendum on Jun. 24, when those voted for leave won a 51.9% share.

The decision resulted in global auto industry's uproar.

Actually, the tire industry has also shaken following the Brexit.

Explosive News for Auto Industry

Before the referendum, Nissan said openly that it would sue the "Brexit camp" for printing the car maker's logo on their leaflets for false propaganda.

Like Nissan, Ford, Audi, BMD, Benz, Hyundai, PSA Peugeot Citroen, Honda, Toyota, and KIA were all against UK's leaving EU.

Among the world's 20 largest auto makers, 18 of them have production plants and investment in UK. About 80% automobiles produced in UK are for export, while 60% of them are exported to EU countries.

After Brexit, those car makers will confront 10% tariff imposed by EU and UK's auto industry will be impacted severely.

In March, a number of cross-country auto makers submitted official documents to the British Chamber of Commerce and British government, earnestly requested them being prudent in "Brexit" and the severe impacts it may impose on the auto industry.

Chairman of VDA said in a press conference that "Germany alone has 100 auto production bases in UK, including the suppliers. If there is a conflict between UK and EU, there will be huge losses for everyone."

Besides BMW, Daimler and Vokswagen, Bosch and Continental AG are also members of VDA.

German auto industry even threatened to quit UK if it leaves EU.

Agitated Tire Industry

Car makers were furious, while tire companies couldn't stay calm any more.

Executive board chairman of Continental AG said given the economic environment in Europe, he was concerned about Britex.

He said, the sales volume of Continental AG in UK was below 3% of the group's total, so Britex had little impact on its future business.

But, he emphasized, Continental AG still expects to stay in British market for greater success in the future.

An insider with Goodyear Dunlop said UK has been an important market of Goodyear. But the company has to reassess the market and investment considering UK's leaving EU.

Pirelli was calmer. A person in charge said Brexit had little, or none, impact on the company's business in UK.

He believed that the major pressure and impact of a company came from rising raw material prices and control on cost management resulting from GBP depreciation.

An industry insider said Brexit has huge impacts on global auto industry. As a key sector of auto industry chain, the impacts on tire industry won't be small.