April 2019

NEWS The automotive sector continued to express concern over the potential impact of Brexit, the outcome of which was still highly uncertain as Aftermarket’s April issue went to press. On Tuesday 12 March, the Prime Minister’s exit deal faced a second Parliamentary vote, and the government lost by 149 votes, admittedly a better result than the 230 vote defeat seen when the deal was first tabled. Commenting on the failure of the second vote on the Prime Minister’s exit deal, Mike Hawes, CEO at the Society of Motor Manufacturers and Traders (SMMT) said: “the vote leaves us perilously close to the ‘cliff edge’. No deal would be catastrophic for the automotive industry. It would end frictionless trade, add billions to the cost of manufacturing and cost jobs. UK automotive businesses will be put at immediate risk. Parliament must reject no deal and take it permanently off the table.” In the interim period, the UK published its breakdown of trade tariffs that would be applied if Article 50 were not extended and no deal became an accidental reality. For the automotive sector, the most relevant inclusions were new cars, which would face a 10.6% import tariff. However, car parts would not face a tariff, and so would not be subject to price increases in the UK as a result. Mike observed: “No policy on tariffs can come close to compensating for the disruption, cost and job losses that would result from no deal. It’s staggering that we are in this position with only days until we are due to leave. Every day ‘no deal’ remains a possibility is another day companies pay the price in expensive contingency measure. No deal was theoretically removed as a possibility just days later when Parliament voted to take it off the table. Mike Hawes went on to say: “Parliament’s clear rejection of no deal is welcome, but the law still requires the UK to leave the EU on 29 March, with or without a deal. To avoid irreparable damage to the UK automotive industry, politicians must come together to find the legal means to take no deal off the table for good. Any extension of Article 50 must be purposeful and long enough to give business stability and Parliament time to reach consensus to end the deadlock.” Sue Robinson, Director of the National Franchised Dealers Association (NFDA), added: "More than half a million people work in the retail side of the automotive industry and it is essential that the stability of our sector is protected.” Transition Commenting on the situation, Garage Equipment Association (GEA) Chief Executive Dave Garratt said: “It would be nice to know that we are going to have a smooth transition and this to me looks as if we probably won't have now. It was interesting to see how the vote went on taking no deal off the table - which is what happened. As Parliament voted to extend Article 50, I guess it will go back to the EU, who deliberately played it down to the last minute so they could get all 27 member states to agree, so the EU will probably force us out, and then it will be their fault that we have a no deal. That way politically we can blame the EU for having a no deal. I guess that's the plan.” On the tariff situation, Dave said: “I was pleased to see that when we announced our no deal tariffs, that we have actually reduced them so it's not like we are going to hike up tariffs on all imported equipment. That is a bit of good news. That means if there is a no deal, that's fine. However, if there is a no deal it will put restrictions in place, as it will increase the time it takes to bring things in. It means there is still uncertainty. For our businesses, it is the ongoing uncertainty that is damaging.” Dave added: “To my mind, the endgame could be to play it to no deal and blame the EU for doing it. In that case we could be sure of uncertainty, and it would be nice to have had some sort of clarification.” The UK’s exit date looks set to be pushed further into 2019. On Thursday 14 March, Parliament voted to ask the EU for a an extension to the 29 March deadline if it was able to agree to a deal by 20 March, just one day before the next EU summit in Brussels. Brexit could be pushed back to 30 June or even later if the Prime Minister’s deal fails to pass a third vote, which was set to take place in the coming days, as Aftermarket went to press. 4 AFTERMARKET APRIL 2019 www.aftermarketonline.net Endgame? Automotive alarm on Brexit