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Brexit And The Car Industry

Leaders within the car industry have pushed for a trade-free agreement ever since the Brexit result was announced 4 years ago. This was deemed essential as approximately 70% of cars registered in the UK are currently imported from the European Union and more than 85% of cars made in the UK are exported.

In 2020 many carmakers confirmed that in the event of a no-deal Brexit they would be forced to raise their prices, with many others suggesting they would have to seriously reconsider their pricing as well. The Society of Motor Manufacturers and Traders (SMMT) gloomily estimated that the alternative to a free-trade deal would result in car prices rising by £2000 in the UK. As a result, potential car buyers were recommended to make new car purchases sooner rather than later.

However, just last month, with very little time to spare, a trade agreement was reached between the UK and the European Union. Prime Minister Boris Johnson described it as “a comprehensive Canada-style free trade deal” and added that it will “allow UK goods and components to be sold without tariffs and without quotas in the EU market.”

What does the Brexit trade-deal mean for the motor industry and its customers?

Industry chiefs welcomed the news with SMMT Chief Executive Mike Hawes stating: “We welcome today’s agreement of a new EU-UK trading agreement, which provides a platform for our future relationship. We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation. A phase-in period is critical to help businesses on both sides adapt and efforts should now be sustained to ensure seamless implementation, with tariff-free trade fully accessible and effective for all from day one. We will continue to work closely with government to ensure all companies are as prepared as possible in the limited time left.”

As we are yet to see concrete details of the trade deal in relation to the motor industry some anxiety remains over disruption within the market and how this could lead to issues of supply with new models. However, what we do know is that tariffs will not be introduced on cars and car parts, provided they contain enough content from either UK or EU factories.

Will Brexit affect electric vehicles?

Under the new trade agreement, carmakers can source batteries which contain up to 70% of materials from countries outside the UK or the EU. However, this rule will be tightened to 50% from 1st January 2024. At present, we source most EV batteries from East Asian companies, so, to avoid incurring tariffs, and in turn increasing EV pricing, we have 3 years to find a way of sourcing them more locally.

However, despite priding itself on technological innovation and promise of government funding, the UK is lagging when it comes to producing its own batteries. This poses a problem given that the main customer concern is the already high price of EV’s when compared to normal combustion engines. Perhaps the worry of rising costs could be the main reason behind the record-breaking EV sales during 2020.

Are there changes to driving abroad?

If you are taking your car to an EU country and plan to be there less than 12 months you will need your UK driving licence, a physical copy of a green card (proof of motor insurance cover when driving abroad) and one of the following: your V5C (vehicle log book) or a VE103 (to prove you’re allowed to use your hired or leased vehicle abroad). You may also need an international driving permit (IDP) depending on what license you have and which country you are visiting.

If your registration plate includes the GB identifier you do not need to add a GB sticker to your car unless you are travelling to Spain, Cyprus or Malta where the rule is mandatory. Otherwise, you will need to add a GB sticker if your plate has a euro symbol, a national flag of England, Scotland or Wales, or numbers and letters only (no flag or identifier.)

For the latest rules and information on hiring a car once in the EU, it is best to check with the embassy of the country you are visiting and the .gov website.

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