Brexit! Nothing Changes So Far: It’s Business as Usual for the European Tire Industry

Oct. 27, 2016

As I sit down to write this column, it is almost 10 weeks since the United Kingdom voted to leave the European Union. Over the past couple of months there has been a tremendous amount of speculation within the European tire industry as to how this momentous decision will affect the tire market both in the short and long term.

By being based in the UK but regularly travelling within a number of European countries and speaking to many different people from manufacturers to dealers, I believe I am in the perfect position to gather an honest and straightforward opinion on how the Brexit vote has been viewed in the market so far.

To be honest there has not (yet) been much (if any) significant change that I have noticed. And on a general note, despite a lot of very negative predictions about the UK economy crashing, to date not a lot has happened. In fact, it would be fair to say that the UK has seen a number of initial, encouraging signs that the controversial decision to leave the EU has actually improved the market in the past couple of months.

For example, in the last few days the UK currency has risen against world currencies for the longest period since the Brexit vote. Plus a series of recent business surveys have indicated that at the moment the UK appears to be bouncing back in terms of manufacturing.

More to the point — what do the European tire manufacturers think of Brexit?Well, I can confirm that German-based Continental AG admits that their initial reaction was a sense of concern about how the vote would affect trade, but now it does not expect big problems and anticipates that a direct economic impact is expected to remain limited both in Europe and the UK.

Meanwhile, Goodyear Dunlop Europe is watching the developing situation very closely and would not comment directly on its long-term prognosis but made it clear they will act accordingly to any future market changes. Over at Pirelli Tyre S.p.A. the mood is calmer where the Italian-based producer confidentially sees no major sales problems in the immediate or long-term future.

Finally, on a more general note, the Society of Motor Manufacturers (SMMT) has called for a tariff-free access within the European market. This last statement indicates more concern from the vehicle manufacturers than the European tire industry.

I have spoken to a lot of people (at all levels) in the European tire industry and almost universally the general belief is that Brexit will not affect the sales of tires in Europe or indeed the UK. At least not in the short term.OK, so the UK has chosen to break away from being part of the European Union. But is this really going to affect trade between countries?  I do not think so! After all, BMW, Porsche and VW in Germany benefit from huge vehicle sales in the UK as do Fiat in Italy and Seat from Spain.

So why would these European countries want to damage such a flourishing sales business? It just doesn’t make economic sense!

Looking at all the bare facts, at the moment nothing has changed and it does not look likely to alter in the near future. In my considered opinion, based on over two decades of working within the UK and European tire markets, for the time being, business will continue as usual. And let’s not forget that although the Brexit vote is now established, it will take at least three to four years before the UK actually leaves the European Union.

Let’s face it — nobody can really predict the future and this interesting and potentially game-changing development has only just begun. So let’s wait and see what happens in the long term. One thing we can be sure of — in some format or other the European tire market sector will continue to move forward and flourish.  

John Stone has been working within the global tire industry for the past 24 years. In 2004 he launched his own consulting company, Sapphire Media Services, which caters to business media clients around the globe. Stone also writes for tire and automotive-related publications in Europe, South Africa and Asia.

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