The National Franchised Dealers Association (NFDA) has said that it hopes the Conservative Party’s general election victory “will stimulate the motor retail industry”.
NFDA director, Sue Robinson, said that the industry body wanted the result – which saw Prime Minister Boris Johnson secure a majority of 78 seats in the Houses of Parliament – will provide “clarity for business going forward” and act as a stimulant for the sector.
Year to date to the end of November new car sales are down by 2.7%, according to data published by the Society of Motor Manufacturers and Trader’s (SMMT) earlier this month, and SMMT chief executive, Mike Hawes, said that another fall in November had reflected “the current climate of uncertainty”.
Following last night’s Conservative Party victory, the automotive sector will be able to plan for a January 31 Brexit, although much will depend on the resulting trade talks with the EU which are set to take place throughout 2020.
Robinson said: “The consumer has had a lack of emotional confidence in investment decisions and we hope this result will stimulate the motor retail industry as it rapidly shifts towards an electric future.
“NFDA will engage with the new Government to promote and safeguard the interests of franchised retailers.”
The Financial Times reported this morning that the value of the pound had “surged” following the General Election result.
Sterling climbed 2.7% to $1.351, its highest level against the US dollar since May 2018, as the UK currency reached its highest level against the Euro since December 2016, it said.
David Kendrick, partner at UHY Hacker Young, said that the recent uncertainty surrounding Brexit and the General Election had created "a tough time for the automotive sector".
He said: "Elections are never great for consumer confidence and generally have an impact on the retail market which from speaking to a large number of clients has definitely been felt in Q3 and Q4 this year."
Kendrick said that "the majority of the business leaders" UHY had spoken to had wanted a Conservative majority, but said: "I am not sure anyone expected the significant share they would actually end up claiming."
He added: "The result now gives us leadership as a country – regardless of whether you like Boris Johnson and some of his proposals, stability will be created and Brexit will be delivered in 2020.
"This has to be a good thing for the sector and general economic climate. We have already seen the positive impact on the stock exchange with a number of the automotive stocks rising over 5% this morning as well as the pound strengthening.
"I also feel this outcome will assist businesses that are keen to expand making more confident decisions as well as those looking at an exit able to still take advantage of the £10m Entrepreneurs relief capitals gains rate.
"All in all a great outcome for the country and certainly for automotive businesses."
While this morning's improvement in the strength of Sterling could aid the UK’s appeal of an export destination for overseas OEMs, if maintained, the automotive manufacturing sector will watch UK government’s negotiations with the EU keenly throughout 2020.
While Brexit is assured, pressure is now on to deliver a trade deal that will deliver on the SMMT’s demands of free and frictionless trade in an effort to preserve the supply lines that manufacturers such as Ford, Jaguar Land Rover (JLR), Nissan, Toyota, Vauxhall and BMW, who manufacturer in the UK, rely on.
Earlier this year PSA Group said that a ‘No deal’ Brexit’ - still possible if trade negotiations with the EU fail before January 31, 2021 - could jeopardise its plan to build the next generation Vauxhall Astra at Ellesmere Port.
Speaking at September’s Frankfurt Motor Show, meanwhile, BMW’s chief financial officer Nicolas Peter and JLR chief executive, Dr Ralf Speth, both expressed their concerns about the terms of Brexit.
Speth, who had previously warned that a ‘no deal’ Brexit could cost his business up to £60m a day due to resulting delays to parts deliveries expressed his frustration at being unable to mitigate against the effects of the split.