‘Thin’ Brexit deal could impact car/van supply and EV manufacturing
The new Brexit deal could see fleets hit by delays on car/van supply on popular new models while there are wider questions on how electric vehicle manufacturing in the UK might be impacted.
Although the Vehicle Remarketing Association (VRA) has said the agreement is a “huge cause for relief” as it avoids the tariffs associated with a no-deal, chair Sam Watkins said several key points surrounding the future of manufacturing and cross-border movement of vehicles remain vague or undefined.
In terms of the direct impact on the used vehicle sector and remarketing, the most obvious immediate effect would be disruption to car and van supply, she warned.
“It’s quite difficult to separate the negative effects of the pandemic and Brexit but getting hold of a number of popular new models is almost certainly going to be tricky in 2021. For a motor industry that has finished last year around 30% down in new car sales compared to 2019, this is not good news.”
Watkins also spoke of the special difficulties surrounding the ‘rules of origin’ arrangements, which could have implications for EV manufacturing in the UK. These rules set out maximum overseas content for batteries in UK-built electric vehicles and hybrids, and could impact whether UK-built models qualify for tariff-free export to the EU.
Already, David Bailey, a business economics professor at Birmingham Business School and a key commentator on the rules of origin including for the VRA, has branded the agreement as a “thin deal with major implications and costs for automotive”.
Bailey added: “Much will depend on the degree of flexibility allowed and the degree of phasing in.”
The VRA also warned the impact on vehicle supplies could bring knock-on effects for the used sector that will persist into the medium term.
“Specifically, the reduced numbers of vehicles entering the market will mean that getting hold of the stock needed by used retailers is going to remain difficult and the situation may even worsen compared to the last few months.”
But she added: “If 2020 has underlined anything, it is that the used car sector is incredibly flexible and innovative, and that people will continue to want to buy despite substantial practical barriers in their way.”
Watkins also said that essential remarketing services such as vehicle storage, logistics and services support would be more critical than ever in the UK during 2021.
“The post-Brexit, coronavirus market is one in which the core functions of remarketing have become more important than ever. When it comes to sourcing the right vehicles at the right price, ensuring their condition, retailing them and then getting them to the customer, all in a secure fashion – then the expected standards in every single one of these areas are being forced upwards by market conditions.
“There is every reason to expect these trends to continue. Certainly, as a trade body, we see the next few months as one where our role is to guide and support our members through times that continue to be turbulent and which promise to remain so for some time.”