If there’s one subject that has been dominating the news in Britain of late, it’s Brexit.
News on Brexit is changing all the time. But at the time of writing, it looks like Britain could leave the EU on 31 October 2019 without a deal. Meaning, there would be no agreements in place about the future relationship between the UK and EU.
Whatever the outcome, Brexit is likely to impact our economy – we’re just not sure as to what extent just yet. Many industries are likely to feel the brunt of Brexit, with the motor trade sector being no exception.
If you own a motor trade business, then depending on your trade, you’ve probably had Brexit on your mind. You may have even started to think of ways in which you can protect and future-proof your company, depending on the outcome.
We can’t stop Brexit from having an impact on your business, but we can help you to protect your assets with motor trade insurance. Motor trade insurance
– also known as traders insurance – provides cover for your motor trade businesses and assets. We can arrange cover for part or full-time traders, mechanics, valeters and more.
The potential impact of Brexit
The Society of Motor Manufacturers & Traders (SMMT), one of the biggest and most influential trade associations in the UK, believes
that a ‘no deal’ Brexit would have a devastating impact on the sector as well as the hundreds of thousands of jobs it supports. Specifically, it says, it would put an end to ‘frictionless trade,’ add billions to the cost of importing and exporting, and put thousands of jobs at risk.
Let’s take a look at some of the key areas it’s likely to impact.
SMMT isn’t just scaremongering. In April, UK car production plunged 44.5%
as factories shut down for the EU exit that never happened, proving the impact that economic uncertainty can have.
One Oxford University study cited by the Guardian
predicts that a no-deal scenario could cut car production in Britain by nearly half by the mid-2020s, with plant closures leading to job losses across the country.
The same study revealed that car production has already decreased by around 9% since the EU referendum in 2016. Volumes have dropped from over 1.7m to less than 1.5m a year, but this could fall to around 900,000 a year if Britain leaves the EU without a deal.
Imports and exports
The outlook is no less gloomy for car imports and exports, says the SMMT
. A no-deal Brexit would in fact “trigger the most seismic shift in trading conditions ever experienced by automotive, with billions of pounds of tariffs threatening to impact consumer choice and affordability,” it explained
Automotive is currently the UK’s largest single biggest exporter of goods, accounting for 14% of total exports. Exports data
shows that the EU makes up over half of all UK-built vehicle exports, meaning it’s our biggest trading partner – but this could all change if we leave without a deal.
Not only will higher tariffs be imposed (with the costs likely to be passed on to consumers) but it could also cause severe disruption to supply chains, and damage the UK’s reputation as a stable investment destination.
Figures cited by Car Magazine
show that investment in the UK’s car industry has already plummeted by 70%. Only £90 million was invested in the first half of 2019 – compared to the £2.7 billion
annual average recorded over the last seven years.
Without the auto sector, it’s likely the UK would lose its hard-won status as the world’s 10th largest goods exporters and fall to 14th place.
Car prices and sales
Brexit will impact every single car manufacturer, explains Car Magazine. Increases in tariffs in a no-deal scenario may very well have a knock-on effect and increase the price of new cars.
Porsche told the BBC, for instance, that it might have to increase the list price of cars by up to 10%. This is due to customs duties and other ancillary fees associated with dealing with a country out of the EU’s trading zone.
Car Magazine cited market analysis company LMC Automotive as saying that a no-deal outcome will hit already-weakening car sales. The firm believes that both car and van sales would continue to decline, bottoming out at 2.55 million by 2020 compared to three million in 2016.
If – and it’s a big ‘if’ – we left the EU with a free-trade agreement that involved a decent transition period, LMC Automotive says this will be enough to stop the ‘sales slide’ in 2020 and boost demand to 2.81 million by 2021.
Is it all doom and gloom?
As you can see, Britain leaving the EU without a deal could go on to impact numerous areas of the motor industry. If a deal and trade agreements are made, then it could be a much brighter picture for the sector.
There are some potential positives we can pick out from this, though. For instance, a decline in new car sales and the increase in new car prices could drive demand in the used-car market. But only time can tell – so for now, we have to sit tight and see what the outcome will be.
In the meantime, if you want to protect your business and assets with insurance that reflects your unique needs, speak to the experts at Insurance Choice.
Motor trade insurance from Insurance Choice can include:
- Car deal at-home policy
- Minder insurance policies for trades including repairers, repossession agents and valeters
- Road risk only cover
- Full trader policies for car dealers at premises, and vehicle importers and exporters
- Cover for traders specialising in sports, prestige and imported cars
We supply cover for motor traders over 25 years old and we will consider criminal convictions.
Protect your business with competitively-priced motor trade insurance from Insurance Choice. Get a quote today