Fleet Assist is working hard to keep its customers and its extensive network of more than 5,000 garages aware of issues a ‘hard’ Brexit could lead to in terms of potential costs and increased vehicle downtime.
As British government negotiations with the European Union continue in the months remaining until the UK leaves on March 29, 2019, Fleet Assist, the leading supply chain management specialist to a significant number of the UK’s major contract hire and leasing companies collectively operating almost 900,000 vehicles and rental firms, is under taking a review of a number of initiatives in a bid to ensure its customers and network of garages are prepared.
Amid huge uncertainty as to the outcome of the negotiations and fears that a ‘hard’ Brexit – or ‘no-deal’ Brexit – could trigger the imposition of World Trade Organisation tariffs, Karen Ewer, Fleet Assist’s head of business development, said: “We are regularly updating our garage network as to the possible impact of a ‘hard’ Brexit and providing our best advice notably in terms of parts stocking levels.
“In addition, Fleet Assist is also exploring and building our relationships with a number of parts suppliers.
“It is business-critical that our partners – service outlets and parts suppliers – are as prepared as possible for whatever the outcome of the Brexit negotiations are so that they continue to offer a first-class and uninterrupted service to fleet customers once the UK leaves the European Union.”
Trade tariffs introduced in the event of a ‘no-deal’ Brexit would add around £1,500 to the price of a new car and £1,700 to the price of a new van sold in the UK and imported from the European Union, according to the Society of Motor Manufacturers and Traders (SMMT), unless manufacturers and their dealer networks were able to absorb the additional costs. Furthermore, tariffs could add an average 4.5% to the cost of parts prices.
Meanwhile, stricter border controls would, inevitably, result in delays in the supply of imported parts and, explained Mrs Ewer: “As most garages operate a ‘just-in-time’ parts ordering process it is envisaged any delays could lead to increased vehicle downtime.
“That is why Fleet Assist is in discussions with its network of garages with regards to parts stocking and parts suppliers to minimise the impact of a ‘hard’ Brexit on service, maintenance and repair (SMR) work and fleet operations.”
SMMT chief executive Mike Hawes has said: “Tariffs alone should be enough to focus minds on sealing a withdrawal agreement between the European Union and UK.”
He has also warned of “disruption and damage” to the European automotive industry in the event of a ‘hard’ Brexit, including to the delivery of billions of pounds worth of components and parts. Today, the vast majority enter the UK without customs’ checks but that would change in the event of a ‘no-deal’ Brexit.
Any potential increase in new car and van prices could cause fleets to extend vehicle replacement cycles. That would replicate measures taken by some fleets in the wake of the 2007/8 bank sector-led financial crisis and subsequent recession and more recently as a result of manufacturer vehicle supply disruption caused by introduction of the new Worldwide harmonised Light vehicles Test Procedure governing car and van homologation.
Mrs Ewer said: “The impact of any price rises may, we believe, cause fleets to consider extending vehicle holding periods thus increasing the age of cars and vans. That, in isolation, should not be seen as a concern. However, it is likely to mean that vehicles will require more extensive SMR work which will be of larger value and take more time. The knock-on effect of that could be some workshop congestion.”
However, Mrs Ewer added: “It should be noted that post-2008 part of this scenario played out and the impact on workshop congestion was not significant.”
Fleet Assist is also concerned that the value of Sterling could fall against the Euro and other major currencies, which would have an impact on the cost of imported goods potentially resulting in a ‘double whammy’ on the price of new cars and vans, components and parts if tariffs were also imposed.
Mrs Ewer said: “In the event of a ‘hard’ Brexit these two factors – price rises as a result of tariffs and a fall in the value of Sterling – tend to indicate that the cost of parts could increase. However, some solace should be gained that the manufacture of components in the UK is growing, making local supply easier.”
Currently it is estimated that some 80% of replacement car parts fitted to British cars are imported, with almost three-quarters of those coming from European Union-based suppliers.
