Just a few years ago, trade in cars and car parts accounted for a good quarter of all business. But since then, things have gone downhill. This has consequences.
A sharp decline in the car business in particular has weighed heavily on German-British trade in goods since the Brexit vote. The car factor is a major reason why the U.K. could slip out of the top ten of Germany's most important trading partners this year for the first time since 1950, the federally owned company Germany Trade and Invest (GTAI) noted in an analysis. Trade in cars and automotive parts has slumped by an average of 12.3 percent a year since 2016, the year of the Brexit referendum. That's more than the combined foreign trade declined overall.
Its importance is also shrinking: while cars and automotive parts still accounted for more than a quarter (26.7 percent) of the UK-German total in 2016, it was less than a fifth (18.8 percent) in 2020. The decline affects all sectors of the industry. For example, exports of German new cars have fallen by an average of 14.1 percent annually since 2016, and new registrations in the UK have fallen by an average of 11.8 percent. As a result, German exports almost halved in value between 2015 and 2020 - from €30.4 billion to €16.4 billion. One reason for the decline is the shift away from combustion engines to alternative drives.
Because the phenomenon is accompanied by a slump in car production in both countries, it is clear though that this is not an isolated British problem. »However, the protracted Brexit process has acted as a strong factor of uncertainty in the British automotive industry«, GTAI noted.
The German industry association VDA also stresses enormous challenges posed by Brexit - despite the last-minute agreement between the U.K. and the EU on a trade deal on Christmas Eve 2020. Trade has become »significantly more complicated and thus more expensive«, the German Association of the Automotive Industry (VDA) told Deutsche Presse-Agentur.