Britain would suffer most if it lost free trade with European markets since 80 percent of vehicles assembled in the country are exported, mostly to the European Union. But for Germany the stakes are also high.
In 2016, Britain was the largest single export market for German manufacturers, who sold 800,000 new cars there, or 20 percent of their overall global exports. Fewer cars are exported to China and U.S. because German carmakers have factories there.
"The consequences of a 'no deal’ would be fatal," German auto industry association VDA said after the vote. "Without an orderly and practical solution for business, jobs in the car industry, particularly on the British side, are on the line."
BMW, which owns two iconic English brands -- Rolls-Royce and Mini -- said in an emailed statement that the uncertainty of UK and EU trade relations are “greater than ever” and that it has to prepare for the worst.
Tariffs are a problem for low-margin high volume automakers such as Toyota, which has a factory in Derby, and Nissan with operations in Sunderland but also for VW Group, which has no British factory besides Bentley and relies on imports to serve U.K. customers.
"We took note of the results of the vote in Britain's parliament with regret," Volkswagen said. "It represents a further phase of uncertainty and hampers our ability to plan ahead. We and the entire industry need clarity about the nature of relations between Britain and the European Union. Every further delay in the Brexit decision-making process puts investment and jobs at risk."
Daimler said it aimed to ensure goods can continue to enter and exit the U.K. in a timely manner after Brexit.
The drag from the looming deadline is already coming through to weigh on the region. Last year, annual car sales in Europe dropped for the first time in five years, led by a sagging UK market where consumers spooked by Brexit delayed buying big-ticket items like cars. Registrations in the UK fell by 6.8 percent last year, the steepest annual decline since the financial crisis.
The only way for the UK to stay in the EU appears to be another referendum, Aston Martin’s Palmer said in an interview, and that would create constitutional issues. His fear is the only other alternative is for the UK to leave by crashing out of the EU, which almost certainly would cause major issues with auto parts crossing borders.
“For us, we’ve had to say, whatever happens, it’s a no deal,” Palmer said. “And any news that improves on that is welcome. And that’s all you can do.”
