New car sales to drop 20 per cent in Brexit recession, analyst says

 
Jake Cordell
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New cars could be piling up on forecourts if the UK economy tips into a recession
New cars could be piling up on forecourts if the UK economy tips into a recession (Source: Getty)

Demand for new cars could tumble by 20 per cent if the UK falls into a recession following the historic vote to leave the European Union.

BNP Paribas warned economic downturns usually shrivel car sales by up to one fifth, in a market update after media organisations called the EU referendum for the Leave side.

The motor industry has been prominent in the campaign, as car makers warned a vote to leave could hit their UK operations, though they vowed to keep their plants open. The industry is seen as a barometer for wider economic health, since demand is highly reliant on a strong economy and high consumer confidence.

Brexit Britain: What you need to know

Experts said there was some evidence the referendum had hit car sales in the run-up to the vote, and with uncertainty on the horizon it is still unclear whether they will come back now the vote is out of the way.

Annual growth in car sales slowed to 2.4 per cent in May, down from 5.1 per cent in April - the 39th consecutive month of expansion.

The share prices of car makers listed on the Asian markets dropped sharply overnight as the result of the referendum became clearer. Honda and Nissan dropped by eight per cent, while European listed manufacturers were braced for a sell-off when the markets open later this morning.

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