It is too soon to measure the impact of the British vote to leave the EU on General Motors but the decision will likely not have much effect on the company in its home market, GM’s chief economist tells Reuters.
Mustafa Mohataram said the most immediate likely impact for U.S. auto sales was a positive one as last week’s referendum result brought with it a greater chance that U.S. interest rates “will remain lower longer” than if British voters had decided to stay in the European Union.
He said that over time there may be a greater chance for additional production at GM’s two plants in England, but he cautioned that the British pound, down about 10 percent against the dollar since the referendum result, would have to maintain a low exchange rate to the dollar for that to be realized. GM’s two plants in England assembled about 13.5 percent of Opel and Vauxhall vehicles in 2015.
Mohataram said those two plants, one in Ellesmere Port that makes compact cars and one in Luton that makes commercial vehicles, are running near capacity, but the company could find a way to boost production if economic conditions were favourable.
On prospects for auto industry sales in the United States, Mohataram said GM has not pulled back from its bullish forecast of industry sales of 18 million vehicles, including medium and heavy trucks, that it gave at the start of this year.
This is pretty much in line with my thinking as I have detailed it in the EPJ Daily Alert.
There is just no reason for Brexit to have much impact on the US domestic economy.
The panic sell-off was nonsense.