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Brexit – the effect on you and your car moving forward

By on September 28th, 2018

With Article 50 triggered ages ago, the UK is due to leave the EU on 29 March 2019. But what will actually happen?

Hard Brexit, soft Brexit, deal or no deal, what does it all mean for the car industry? Will new car prices rise? What about petrol? Will UK-based manufacturers move to Europe?


What does Brexit mean for the manufacturers?

Currently, Honda, MINI, Nissan and JLR have factories in the UK, with the automotive sector employing 800,000 -ish people. Pre-referendum, the industry benefited from substantial investment, with Sunderland’s Nissan plant securing contracts to build the Qashqai, Juke and Leaf.

However, since June 2016, investment in the automotive sector has fallen by around 33% with many foreign investors wary of the effects of leaving the Single Market. That said, Toyota invested  £240m in its UK plants in 2017, signalling that future trade deals with the EU aren’t necessarily a make-or-break scenario.

Other major news includes French company Peugeot’s decision to buy Vauxhall from G M. Peugeot has confirmed that jobs at Vauxhall’s Luton and Ellesmere Port plants are safe until at least 2020, but after that – who knows!

However – Jaguar Land Rover has moved 2,000 staff at its Castle Bromwich plant to a three-day week until Xmas, citing Brexit uncertainty and sliding sales of diesel vehicles.

Elsewhere, BMW has previously announced that they plan to shut their Mini plant in Cowley, Oxford, for up to a month after the UK’s departure from the EU to minimise the impact of a no-deal Brexit and fears it may cause a shortage of components. Honda meanwhile has reiterated that a no-deal Brexit would cost it “tens of millions of pounds”.

That’s not the only knock-on effect the upcoming exit from the European Union threatens to bring. While the UK’s electric vehicle market and plans to rapidly grow infrastructure flourishes, a no-deal Brexit could radically undermine incentives for carmakers to push sales in Great Britain.

Coming only days after the PM pledged £106m to try and help Britain’s electric car industry, including  – green number plates to promote awareness of ultra-low emission vehicles, it was revealed by the Financial Times, that cars sold in the UK would no longer count towards manufacturers’ EU CO2 targets!!!!!

This would reduce one of the reasons for manufacturers to sell battery vehicles in the UK, potentially upsetting the government’s hard work towards phasing out the sale of traditional petrol and diesel vehicles by 2040.

Following the initial triggering of Article 50, the Society of Motor Manufacturers and Traders (SMMT) warned that the continued uncertainty risks damaging the £76 billion pound automotive industry in the UK.

SMMT chairman, Mike Hawes said: “Triggering Article 50 has started a race against time to secure a deal that safeguards the future of the UK automotive industry. Government has committed to creating and supporting the right conditions for our industry to be successful.

“That means certainty in our relationship with our biggest market, tariff-free and open borders so products, parts and investment can flow freely, and continued influence over the regulation that governs the vehicles we build and drive. Now is the time for the government to deliver.”

Also, while demand for new cars has cooled somewhat since 2016’s record registration lfigures, the industry continues to be buoyant and resilient. So far, Brexit has done little to slow down consumers, with the dip in registrations also down to government-caused confusion around diesel.

Will cars cost more?

According to the SMMT, EU tariffs on cars alone could add at least £2.7bn to imports and £1.8bn to exports annually.

Import tariffs alone could push up the list price of cars imported to the UK from the continent by an average of £1250 – 1,500 if brands and their retail networks were unable to absorb these additional costs – a potential worry considering 85% of all new cars in the UK are imported from Europe.

What about car finance/leasing legislation?

Much regulation currently applicable in the UK derives from EU legislation, and this will remain applicable until any changes are made, which will be a matter for the government and Parliament.

The Financial Conduct Authority (FCA) has stated that firms must “continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect”.

“Consumers’ rights and protections, including any derived from EU legislation, are unaffected by the result of the referendum and will remain unchanged unless and until the government changes the applicable legislation,” it said.  So basically no changes immediately in March 2019.

What about insurance?

Car insurance prices are, at the moment, at their highest ever level according to many reports. Although that can’t all be blamed on Brexit, there’s no denying that the EU has been generally good for car insurance; a 2012 ruling made it illegal for insurers to discriminate on the grounds of gender, bringing costs for male and female drivers in line, which was nice.

The recent fluctuation in the value of the pound could be said to be partly responsible for a rise in premiums, as many insurers are multi-national’s that cannot afford to give a real-world discount to UK drivers compared to those abroad.

Legally however, there are not going to be any immediate changes, according to the AA. Under current EU law, anyone who has a car that they insure, can legally drive their car in any other EU country and benefit from the minimum level of insurance cover (usually third party) that applies in the countries visited.

What about fuel prices?

Like insurance, the cost of filling up has risen recently quite alarmingly. This is due to currency fluctuation and, with the pound down and crude oil on the up, these rises inevitably end up on the forecourt. The RAC has warned that the average cost of a full tank of petrol may hit a record high of £70 in October 2018!!

If the UK fails to agree on the terms of its exit and divorce settlement from the EU, (no deal) and trades using World Trade Organization tariffs, the likely result is fuel prices increasing by as much as 20%, according to PetrolPrices, thanks to the drop in the pound’s value.

For an average two-car family that fills up every fortnight, this could add around £500 per year to your motoring outgoings………………………….

Will driving laws change? What about my driving licence?

Currently UK driving licences are valid in the EU. If you hold a UK licence, you can drive for both work and leisure purposes throughout the EU. However, the Licence Bureau has warned UK drivers that their driving licences may not be valid in the EU in the event of the nation exiting with no withdrawal agreement in place!!

This states that UK residents looking to drive or hire a car in EU countries post-Brexit will need to be in possession of a UK driving licence and one or both of two different International Driving Permits (IDPs). One IDP is governed by the 1949 Geneva Convention on Road Traffic and the other is governed by the 1968 Vienna Convention on Road Traffic.

It’s still far too soon to know exactly what lies ahead for the UK and its motor industry, but will bring you all the important news as it happens.

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