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The departure of Britain from the European Union will have an obvious impact on the auto industry, in particular in the area ofÂ manufacturing and cross-border sales.
Carmakers including General Motors, Ford Motor,Â Nissan, Toyota, Jaguar Land Rover, BMW and Honda build large numbers of vehicles in the UK and many of them are exported. Because Britain is part of the EU, those exports benefit from an internal market where cross-border trade flows aren't subject to tariffs.
That will likely change once Britain leaves the EU. "Overall, we can expect an increase in direct and indirect costs, when, in relation to the EU, the UK gets third-country status," said Stefan Bratzel, head of Germany's Center of Automotive Management (CAM).
This will lead to "a slow but steady departure of the automotive industry from the island," Bratzel predicted.
What is less clear is whether Britain's exit will slow down or impact in another way the digitalization of the car industry. And another question is whether the global IT industry will be impacted.
Bitkom, Germany's high-tech association, warned that Brexit will hurt the EU's efforts to create a digital internal market,Â a prerequisiteÂ for the smooth functioning of cross-border vehicle-to-vehicle and vehicle-to-infrastructure communications.
"It is to be expected that the UK will move away from the standards of a digital internal market," said Bitkom managing director Bernhard Rohleder. It is crucial, however, that globally accepted standards in IT will prevail, he added.
Said the Bitkom chief: "Internationally uniform rules are a precondition for a functioning and competitive digital economy."
UK tech industry worries
UK technology companies, in a recent poll, showed themselvesÂ to be strongly in favor of remaining in the EU. In the poll conducted by techUK, a tech industry lobbying group, 70 pc of businesses supported EU membership.
"UK tech is thriving, creating jobs almost three times faster than the rest of the economy," Said Julian David, techUK CEO. And, citing the EU's market of 500 million people, he added: "The vast majority of our members say that being in the EU supports that growth."
The data center business is one area where Britain has thrived as a hub for pan-European services. "Historically, London has offered an ideal base for local, regional and international firms to provide co-location hosting and cloud services to the rest of Europe," Rory Duncan, research director at IT market analystsÂ 451 Research said in a press release. "This status is now at risk, prompting some providers and their customers to consider other locations such as Frankfurt or Amsterdam for ease of doing business within the EU."
The large Indian IT community also expects consequences from the vote.Â R. Chandrashekhar, president of India's IT association Nasscom, said in a blog post earlier this week that theÂ UKÂ has traditionally been the gateway for Indian IT firms to enter Europe and that this may now change.
"Indian technology companies have set up a large presence in UK to serve the UK market and built deep relationships," he said. "Many such IT companies from India serve EU markets from their headquarters in London," he added, citing the easy movement of skilled workers between EU and UK as an enabling factor.
"Consequently, a negative implication of Brexit is that Indian IT companies may need to establish separate headquarters/operations for EU, leading to disinvestment from UK and diversion of activity from UK to EU," Chandrashekhar said. "From an Indian tech industry perspective, an exit could thus create scenarios wherein companies will need to establish separate European headquarters."
One company that doesn't expect to change its approach to the UK is software giant Microsoft.Â Despite the importance of the UK market for Microsoft, CEO Satya Nadella doesn’t believe Brexit will have an immediate effect on the software maker’s operations there.
“We’ve been there for 30 years and we’re going to continue to invest because it’s a huge market in a place which is pretty core to us,” he said in an interview on US business news channel CNBC. The UK accounts for 7.8 pc of Microsoft’s global revenue, Nadella said.
British car manufacturing
Germany's Auto Industry Association, the VDA, underlined the importance of Britain for the German industry. German car brands racked up around 50 pc of all car sales on the island last year and BMW, for one, sold 236,000 cars or 10 pc of its global unit sales in the UK. Germany exported 810,000 cars to the UK.
Europe is equally important for the UK car industry, the VDA noted. UK car exports stood atÂ 1.2 million units last year, a sizeable part of the country's overall production volume of 1.6 million vehicles.
The UK auto industry expressed concern over the outcome of the British referendum, which showed the voting population in favor of leaving the EU winning the vote by a 52-to-48 pc margin.
“Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests," Mike Hawes,Â chief executive of the Society of Motor Manufacturers and Traders, said in a statement. "This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment.”
-By Arjen Bongard