Changing Lanes? Brexit and UK Automotive: Impacts and implications for corporate strategies and industrial policy.

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The Fellowship aims to explore what Britain's departure for the EU means for manufacturing and the UK automotive sector (hereafter 'UK auto'), for the corporate strategies of auto assemblers and suppliers in dealing with Brexit, and in turn for policy nationally and locally in the UK. There is much interest in UK auto given that it had, until recently, been seen as something of a 'star performer' of the UK economy. Instrumental in the industry's success was, critically, the UK being part of the EU Single Market, with significant foreign investment by multinational auto assemblers in the UK to access and serve the Single Market. Furthermore, UK auto is seen as having benefitted from the UK's EU membership through the EU cutting international trade deals, in the UK influencing EU regulations affecting UK auto, and in accessing skilled workers as well as European research funding and networks. Such factors will need to be re-evaluated by firms in the wake of Brexit, and depending on the form of Brexit, opening up areas for research which are the focus of this fellowship. Investment in UK auto has declined markedly of late as auto assemblers and suppliers postpone investment decisions, awaiting clarification on the form of Brexit and the UK's future trading relationship with the EU. Even if Parliament does support a Brexit Deal, the transition period offers only short term clarification on trading; longer term, a new trading arrangement needs to be agreed, again raising issues of uncertainty for the sector. The industry is also seen as heavily exposed to the form of Brexit given the nature of its integration into automotive supply chains across Europe. Not only do supply chains cross borders many times, so may be affected by tariffs in the event of No-Deal, but the nature of modern Just-in-Time (JIT) delivery means that assemblers keep limited stocks to keep costs down. Components flow across the Channel on a daily basis as they are needed and in the order they are needed. Even minor disruptions to customs arrangements could have a major impact on supplies and hence existing business models for auto assemblers operating in the UK. A No-Deal scenario is seen as an 'existential threat' by the UK auto industry given exposure to tariffs and customs delays. Other forms of Brexit have different repercussions depending on the extent of tariff and non-tariff barriers introduced, access to skills, and so on. In better understanding these potential impacts, the Fellowship will firstly bring together an overall summary of existing economic research on the impact of Brexit on trade, FDI and output relating to UK auto. This summary of existing research will also cover possible impacts of plant downsizing and closures arising from restructuring, and policy options for dealing with economic shocks. New research will build on this summary by extending our understanding of the impacts of Brexit on UK auto in the following key areas: 1 The impact of Brexit on UK automotive within European and Global supply chains;2 Firm and plant level impacts of Brexit on UK auto;3 Identifying and evaluating corporate strategic responses to Brexit;4 Wider technology shifts in the sector as the sector shifts towards electric and autonomous cars.This new research will be brought together with existing work to provide a deeper understanding of the possible trajectories of UK auto under Brexit on a number of levels. This would comprise: plant level strategies for major auto assemblers; implications for component suppliers (using a regional case study); the positioning of UK auto in the wider European and global industry; and how Brexit, as a challenge for the sector, needs to be appreciated within a wider shift in the sector towards new technologies.Possible policy issues and implications will be considered at a national and local level, including implications for industrial policy, and short and longer term local responses.