A cliff-edge Brexit could have 'semi-catastrophic effects' for Aston Martin

Marco Green
November 15, 2017

Auto manufacturers with plants in Britain, including Japan's Honda and Toyota Motor Corp. and Munich-based BMW AG, have been pushing United Kingdom authorities to ensure vehicles and components can continue to enter and leave the country with minimal trade barriers once European Union ties end.

The Society of Car Manufacturers and Traders warned the cost of cars in the United Kingdom in the event of a no-deal could increase by £1,500 per vehicle.

Luxury vehicle maker Aston Martin said that production in the United Kingdom may have to be put on pause if Britain doesn't manage to strike a Brexit deal with the European Union. Aston Martin's Finance Director, William Wilson, told the UK Parliament's Select Committee on Tuesday that the company may not be able to sell in Europe if the British Vehicle Certification Agency can not renew Aston Martin's license.

Currently, all new vehicles in the United Kingdom are required to have Vehicle Certification Agency (VCA) approval, also valid in the EU. 70% of cars circulating in the United Kingdom are imported, mostly from the EU.

"Not only in resourcing to another type approval. but also the semi-catastrophic effect of having to stop production because we only produce cars in the United Kingdom", he said.

Vehicle makers must stop production temporarily when applying for new certification, since they can not hold approval from more than one authority simultaneously. About seven in 10 vehicles sold in the United Kingdom come from the EU.

80% of United Kingdom vehicle manufacturing output is exported, according to the Financial Times.

World Trade Organisation rules, the default position after no deal, apply tariffs of 10% to finished automobiles.

Mr Keating said Honda imports two million components every day from the Continent on 350 trucks and has just one hour of stock on its shelves.

Mr Wilson said he "hoped it would not come to that", adding he was "encouraged" by talk of a transitional deal. This poses a problem for the United Kingdom, as free trade agreements require that 60% of goods must come from within the countries making the agreement.

Investment had been averaging £2.5bn a year but fell to £1.6bn in 2016 and is headed to be less than £1bn this year, with anecdotal evidence of vehicle companies "sitting on their hands", said Mr Hawes.

"How much of that 44% actually comes from the United Kingdom, bearing in mind those suppliers are buying in supply chains from all over the world?"

Other reports by Click Lancashire

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