Mr. Subrata Ray, Sr. VP, Co-head, Corporate Sector ratings, ICRA Ltd commented on “Brexit impacts on Auto Industry”
The EU today accounts for ~35-40% of auto component exports from India, which could potentially be impacted by market volatility and by any slowdown in the region due to policy uncertainty. Apart from Auto components, OEMs also exports Passenger Vehicles from their Indian manufacturing units, which may get impacted in event of any slowdown. Further, relative depreciation of GBP and Euro may impact their margins as well.
The overall ‘Brexit’ process however is expected to be slow – the formal process should take about two-years. While potentially manufacturing based in UK can face EU import tariffs in the future, the final outcome would depend on how the existing trade & regulatory arrangements are negotiated.