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Brexit - An outlook for Austria's automobile industry

Austria's automotive sector could lose up to € 480 million in turnover

A hard Brexit would hit the European automotive manufacturers particularly hard, with the largest automotive exporter Germany expecting a drop in sales of 31% (€ -6.7 billion) in 2019. For the remaining countries of the EU-27, excluding Germany, the expected development is even more problematic; a drop of 36% (€ 8.3 billion) is expected.

Austria's automotive sector would feel the effects of a hard Brexit directly through a decline in automobile sales, as well as indirectly through the reduction in sales volumes. With a share of 8% or €295 million in sales, the United Kingdom represents the second largest customer of the Austrian automotive production (Total volume: € 3.7 billion). The projected 36% decline in sales in the case of a hard Brexit would therefore amount to approx. € 106 million.

In addition, indirect effects are also to be taken into account due to the dependence on delivery to foreign automobile manufacturers. It can be derived, that the € 6.7 billion in expected German sales losses therefore indirectly affect the Austrian market (see chart). This negative effect for Austria's automobile sector could amount up to € 210 million.

Austria's export quotas to Germany (50%) and the rest of the European Union (just under 40%) suggest that the potential sales losses resulting from the indirect sales effects of German and other European automakers would amount to approx. € 375 million.

Overall, in the case of a hard Brexit, the Austrian automobile sector would experience a drop in sales of around € 480 million, taking into account both the effects of direct exports to the United Kingdom and indirect effects resulting from the decline in sales of other European automotive manufacturers. With an industry size of around € 43 billion, a reduction of this extent would represents a decline in the volume of the automotive sector of approx. 1.5% .

For the scenario of a hard Brexit, the assumptions of WTO duties as well as a 10% decline in value of the pound for 2019 were assumed.

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