Brexit has finally started taking shape and we are going through the most difficult time in modern history. Check out the details of this decision I this BBC News article. The people of the UK are finally waking up to the harsh realities of Brexit and the motoring industry is not an exception.
Motorists are busy calculating the immediate effect of this major decision. There is no doubt that UK economy will go through many ups and downs till 2020 until the Brexit divorce is finalized and all the conditions are met. In an AA Populous poll, 80% drivers were concerned about the impact of Brexit on motoring. This survey was conducted on 20,000 motorists from across the country just three weeks after the referendum.
63 percent respondents said that they were worried about rise in fuel prices while 57 percent were concerned about insurance becoming more expensive post-Brexit. The motorists also believed that medical care received to drivers while travelling to EU will be available at higher prices. Moreover, when crossing EU borders, they will also have to worry about a discriminating exchange rate against the more powerful Euro.
In fact, respondents believe that there could be significant delays while crossing EU-UK borders as well. The concern has proven to be true as drivers had to wait for 14 hours at the Port of Dover after the survey as the French imposed stricter security checks on UK citizens.
Leaving the motorists’ concerns aside, could there be good news for the UK motoring industry after Brexit? We talked to used vans specialist Van Monster to check the state of affairs in the industry and how this sector will be affected after UK goes its own way.
New trends in vehicle production
The good news is that the UK’s vehicle production scene is very active. In fact, in June 2016, we achieved a 16-year production high for cars in the UK. There was a 10 percent increase in numbers in June 2016 alone. This, however, doesn’t mean that car manufacturers are not breaking a sweat about the divorce. In fact, only 8.3 percent people in the industry felt that it the industry will be affected positively. A staggering 57 percent were concerned about adverse impact of the event.
Mike Hawes, SMMT Chief Executive commented on the situation and said that the rise in vehicle production did not reflect a positive Brexit sentiment. He said that the rise in production could be attributed to various factors, especially investment over the years in this sector. Most vehicle manufacturers made vehicles keeping the single market access of the EU in mind and they are now lost in jeopardy.
The industry feels gravely concerned about the tariff barriers for their vehicles in the EU. The fate of the motoring industry is still unclear as we do not know which trade deals will be lost to the EU and what new deals will replace them. Additionally, there are chances of losing out on EU labor as well.
Will used vehicle market get a boost?
Industry experts believe that the used vehicle segment will be the least affected after Brexit. The Telegraph reported that manufacturers with tighter operating margins will likely be shifting new cars abroad, in search of better returns. Close Brothers Motor Finance’s Chris Bosworth suggested that there is already a surge in finance deals for used cars in the UK which could help in making the segment shine when the new cars segment loses some of its sheen.
Bosworth also took the time to compare this trend with the one following the 2008 financial meltdown, when the new cars segment was tailing the used cars segment. New cars in the UK were heavily subsidized. However, with new regulations, they will most likely not come with lucrative offers.
Do you think that the UK’s vehicle manufacturing industry will be able to jump back from adversity and stand back on its feet? It is highly likely that the motoring industry will eventually come to terms with the post-Brexit situation and find a way to sustain. However, before that happens, we will likely have to think about better ways to cope with a disruption in this sector.