Ford of Europe expects a depreciated pound rather than reduced consumer confidence to be the biggest risk for car demand in the UK following the country's vote to quit the EU.
A weaker pound will make it less attractive for automakers to push volumes into the market and also will mean higher sticker prices, said Roelant de Waard, Ford of Europe's sales and marketing chief.
"I would say the biggest risk at the moment is not so much sentiment in the marketplace but the exchange rate," de Waard said."The one thing that could dampen the market is if the exchange rate stays weak or gets even weaker, which will inevitably lead to higher pricing."
Ford does not produce any vehicles in the UK but it builds about 1.6 million engines in Dagenham near London and in Bridgend in Wales. The weaker pound has made these engines more cost competitive but de Waard said the drop in sterling is a net negative since the company generates more revenue in the UK.
De Waard said there is little evidence so far to suggest that the UK car market is plummeting. In some areas, demand is higher although others have reported less showroom traffic.
"When you look at Britain, it's quite a patchy picture," de Waard told reporters on a conference call Friday. "We shouldn't forget that half the country is extremely happy at the moment because they won the vote. That probably explains why we haven't seen a dramatic change in demand."
Current forecasts suggest that the UK market could shrink by 10 percent under a worst case scenario to an annual rate of 2.8 million vehicles, he said. That would still be higher than the record of 2.63 million for 2015.
The UK market is critical to Ford. With sales of 335,267 passenger cars last year, up 2.6 percent, according to data from industry association SMMT, Ford was the UK's top-selling brand, ahead of U.S. rival General Motors' Vauxhall brand, which was No. 2 with flat sales of 269,766.
For the moment, Ford of Europe doesn't expect to take any decisions regarding investments or jobs in the UK as a result of the Brexit vote.
In February, Ford said it will cut white collar jobs in Europe as it seeks to lift its weak profitability in the region.
Ford of Europe's communications chief, Mark Truby, said several hundred employees in the UK and Germany have accepted voluntary lay off offers. "We don’t have any plans for any others at this point, certainly nothing yet related to Brexit," he said.
Immediately following the June 23 referendum, the Financial Times reported that Ford was considering reducing its 14,000 headcount in the UK.
Source: autonews.com
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