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The impact of a no-deal Brexit on Motor Traders and how you can help your business prepare

Feb7

The impact of a no-deal Brexit on Motor Traders and how you can help your business prepare

Brexit is fast approaching (29th March 2019) and The Society of Motor Manufacturers and Traders (SMMT) have warned that ‘leaving without a deal would be catastrophic’. 

 
The SMMT have cautioned that if the UK were required to trade on the basis of World Trade Organisation (WTO) rules in the case of a no-deal Brexit ‘This would see the application of a 10% tariff on vehicles and an average 4.5% tariff on components which will increase the cost of production, undermine competitiveness and potentially increase the cost of cars for consumers.’ 
 
  • Analysis suggests the UK motor industry faces a £4.5 billion tariff cost for cars alone which could add at least an annual £2.7 billion to imports and £1.8 billion to exports
    • Leading to the average cost of a car from an EU country potentially rising by £1,500, with the cost of a van rising by £1,700 (if manufacturers and dealers do not absorb the extra costs)
    • For EU buyers, the average cost of a UK built car could raise by £2,700
  • New customs procedures risk creating additional administrative burdens, raising costs and damaging competitiveness 
  • Potential changes to the free movement of labour risks increasing costs for UK automotive businesses, as well as serious business planning challenges
  • There is uncertainty whether the Vehicle Certification Agency (VCA) will still hold the ability to grant European approvals, which could question the validity of existing type approvals issued by the VCA once the UK has left the EU 
 
The potential for a ‘no-deal’ continues to loom over the motor trade industry. And motor traders are worried—recent research from the SMMT found that over 70 per cent of UK automotive organisations believe a no-deal scenario would damage their business. 
 
In response, the SMMT found motor trade businesses have started making the following plans to prepare for the damage Brexit may cause: 
 
  • Expanding their overseas footprint (26 per cent)
  • Adjusting logistics and shipping routes (23 per cent)
  • Investing in their skills base (22 per cent)
 

Manage Your Risks

Apart from these top preparation methods, consider protecting your motor trade business by purchasing various insurance solutions, such as business interruption cover and trade credit insurance. 
 
Your business is exposed to numerous special risks. A complete appraisal of what you face and a bespoke policy will help protect your business and ensure future profitability.
 

Contact Higos Insurance Services Ltd today on 01458 270 428 for more information on crafting a robust motor trade insurance policy.

For more information on how we can help protect your business, visit our Motor Trade page or complete our online quote request form.
 
Our previous blogs regarding your Motor Trade business may also be helpful:
 
 

Posted by: Higos Insurance Services Ltd