Politics accelerates decline of car industry

Scandals and falling demand are factors but Brexit and geopolitics are key drivers

 Ford Bridgend Engine plant in south Wales on the day it was confirmed the plant is to close next year. Photograph:  by Geoff Caddick/AFP/Getty

Ford Bridgend Engine plant in south Wales on the day it was confirmed the plant is to close next year. Photograph: by Geoff Caddick/AFP/Getty

 

The global auto industry is stalling. Falling demand, particularly in the all-important Chinese market is causing a slump in sales.

The VW emissions scandal has emboldened regulators to enforce far tougher standards on car producers, and in some instances introduce city bans on diesels. This in turn is forcing car companies to ramp up the development and delivery of new electric models.

All the while, a new generation of urban buyers are being lured towards car-sharing schemes and a shift away from ownership. It’s hardly surprising then, that the share prices of many auto giants are down over 20 per cent so far this year, in a market that is otherwise flat.

For all the seismic shifts in the sector, it is the politicians who seem to be most determinedly steering the car giants towards the kerb.

Political sidewinds are battering the already unstable industry

Two major announcements on Thursday had evident political fingerprints, despite denials. Ford’s decision to shut its engine plant at Bridgend in south Wales was a consequence of several factors, but claims that it has nothing to do with Brexit are a little hard to take.

Uncertainty over Britain’s plans to leave the EU has clearly fed into the company’s calculations. Earlier this year Ford warned that a so-called no-deal exit would have “catastrophic” implications for its operations in the country.

On the continent, the proposed €33 billion merger of Fiat Chrysler and Renault came unstuck because of French government concerns over safeguarding jobs in France. The government is Renault’s largest shareholder. It’s likely that officials in France were also concerned about having to fend off pressure from the Italian government if the time came to make cuts at plants there.

At the same time European and US auto groups are regularly forced to adjust their business plans to fit the mood music emanating from the Trumpian White House.

These political sidewinds are battering the already unstable industry. The auto giants have plans in train for the big tech and social shifts, often taking shelter in partnerships and consolidation: it’s the political intrigue that’s likely to cause them to crash. And if there is one lesson we can learn from the UK auto industry, it’s that politicians should not be let near the wheel. If in doubt, consider the sorry tale of British Leyland.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.