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The UK votes for Brexit and it will impact automakers

It's the first morning after the United Kingdom voted for what's become known as Brexit – that is, to leave the European Union and its tariff-free internal market. Now begins a two-year process in which the UK will have to negotiate with the rest of the EU trading bloc, which is its largest export market, about many things. One of them may be tariffs, and that could severely impact any automaker that builds cars in the UK. This doesn't just mean companies that you think of as British, like Mini and Jaguar. Both of those automakers are owned by foreign companies, incidentally. Mini and Rolls-Royce are owned by BMW, Jaguar and Land Rover by Tata Motors of India, and Bentley by the VW Group. Many other automakers produce cars in the UK for sale within that country and also export to the EU. Tariffs could damage the profits of each of these companies, and perhaps cause them to shift manufacturing out of the UK, significantly damaging the country's resurgent manufacturing industry. Autonews Europe dug up some interesting numbers on that last point. Nissan, the country's second-largest auto producer, builds 475k or so cars in the UK but the vast majority are sent abroad. Toyota built 190k cars last year in Britain, of which 75 percent went to the EU and just 10 percent were sold in the country. Investors are skittish at the news. The value of the pound sterling has plummeted by 8 percent as of this writing, at one point yesterday reaching levels not seen since 1985. Shares at Tata Motors, which counts Jaguar and Land Rover as bright jewels in its portfolio, were off by nearly 12 percent according to Autonews Europe. So what happens next? No one's terribly sure, although the feeling seems to be that the jilted EU will impost tariffs of up to 10 percent on UK exports. It's likely that the UK will reciprocate, and thus it'll be more expensive to buy a European-made car in the UK. Both situations will likely negatively affect the country, as both production of new cars and sales to UK consumers will both fall. Evercore Automotive Research figures the combined damage will be roughly $9b in lost profits to automakers, and an as-of-yet unquantified impact on auto production jobs. Perhaps the EU's leaders in Brussels will be in a better mood in two years, and the process won't devolve into a trade war. In the immediate wake of the Brexit vote, though, the mood is grim, the EU leadership is angry, and investors are spooked.

China's largest dealer body pushes back against foreign automakers over huge inventories

Do not think for a second that automakers forcing inventory on dealers in order to pad the numbers is a ruse known only in the US. Stories of individual brands have hinted at the trouble Chinese dealerships are having trying to move units as the country's economic growth remains hot but comes off the boil, like the one revealing that 95 percent of Toyota-FAW showrooms are losing money. Yet Toyota isn't the only culprit, and the issue has become so dire that the China Automobile Dealers Association (CADA), the largest dealer body in the country, has written to the government to complain. Chinese car sales are expected to close out the year with an annualized growth of six-percent, down from last year's 14 percent when targets were set, while in the background the pace of overall economic expansion is the slowest its been since the early nineties. Automakers, shipping cars on schedule to make their earlier targets, have blown up inventories such that they are an average of 1.8 times monthly sales, when the preferred multiplier is from 0.9 to 1.2. According to the CADA, the price wars and necessary incentives mean that only 30 percent of dealers are operating in the black. That number is down a whopping forty percent since 2010. In response, Toyota has already said it will not make its 2014 target of 1.1 million cars sold. We're a long way from 2012, when Toyota planned on selling 1.8 million cars in China in 2015, a target that's now as realistic as a manticore. BMW, Honda and Nissan have erased numbers on their spreadsheets, too; BMW growth dropped from 20 percent to 8 percent midyear after it began "reducing wholesale supplies," and Honda has been reworking its plans as sales have decreased each of the past six months. It's a big deal for Chinese dealers to begin protesting publicly, the CADA saying, "In the past, dealers were angry, but dared not speak out. But now, they have to shout because the situation is getting so unbearable." With six-percent growth forecast for next year and dealers unwilling to remain underwater, The Year of the Sheep coming in 2015 could portend meaning beyond the zodiac. News Source: ReutersImage Credit: AP Photo/Andy Wong BMW Honda Nissan Toyota Car Buying Car Dealers

Nissan not shuttering Leaf EV battery plants, at least not yet

The big news on the electric vehicle front today is that Nissan is considering slowing down EV battery production in the US and UK and source all of Nissan's big packs come from Japan. Nissan may also buy some batteries from the Korean company LG Chem. This is apparently causing dissent within Nissan, but it follows what Alliance partner Renault is doing in the hunt for 180-mile EVs. This change – officially denied by Nissan – raises a lot of questions here, since Nissan made a huge deal about building the Leaf pack in Tennessee a few years ago. In fact, the car's big price drop was due, in part, to localizing battery production. If the company is really going to give up on building the packs where it makes the cars, then does Nissan not see itself as being capable of producing an energy-dense battery cheap enough to compete with Tesla and its Gigafactory and GM (which, of course, has long worked with LG Chem on batteries)? Whatever Nissan decides, it needs to be ready to compete in a market that offers a $35,000, 200-mile car by 2017. "We have not taken any decision whatsoever to modify battery sourcing allocation." – Renault-Nissan's Rachel Konrad Nissan would not comment directly on the reported change, but Rachel Konrad, the Alliance's global director of communications and marketing told AutoblogGreen, "The Renault-Nissan Alliance remains 100 percent committed to its industry-leading EV program. This global commitment continues for the foreseeable future, and we have not taken any decision whatsoever to modify battery sourcing allocation. Nissan has no plans to impair its battery investments. Beyond that,we will not comment on speculation or anonymous sources, and as a matter of policy the Alliance does not confirm or deny procurement reviews." There's a point-of-view where it doesn't matter where the batteries come from if the resulting EV is competitive, price-wise. Renault CEO Carlos Ghosn, after all, said during a recent Twizy test drive that the battery is a means, and the objective is the car. In the end, Nissan is saying it has no near-term or medium-term plan to shutter plants in US or UK and CEO Carlos Ghosn says, "What's important to us is that electric car performance fully meets customer expectations." Whatever's going on, Ghosn has seen three top executives leave the Renault-Nissan family recently.