As the deadline for Brexit comes near, carmakers in the UK are expressing concern over being hit by tariffs if the UK and EU do not agree to a trade deal. While trade between the EU and the UK will be governed by new regulations from January 1, it is expected that the prices of imported cars will foresee an overnight surge of 10 per cent in case tariffs are enforced under the WTO regime.

According to the Deputy Director General, Confederation of British Industry, Josh Hardie, COVID-19 has greatly disrupted the resilience of businesses. With rolling deadlines already costing enterprises, who have seen their stockpiles dwindle and cash reserves disappear, it is time for political and business timetables to link up, rather than contend, added Hardie. The confederation also underscored the requirement for clarity for enterprises.

The threat of turmoil from January 1 is likely to be faced by every company selling across borders, cite sources. For factories in the UK, the threat is potentially larger than sale losses. Quoting an instance, Nissan has been consistently warning that its Sunderland plant business model, the largest plant in Britain, would not be sustainable upon imposition of tariffs.

Further, the maker of classic-style hand built cars, Morgan, which produces only about 800 cars per year, is in a rush to finish orders for clients in Europe before the January 1 deadline.

Additionally, there has been widespread stockpiling of products or parts given that it is one of the few elements that stay within the companies’ control, even though stockpiling cars or parts in car parks and warehouses could lock up large sums of money.

A spokesman from Volkswagen, which is UK’s second biggest brand in terms of sales, has asserted that the stockpiling could not be ascribed directly to Brexit as the company also stockpiles components for covering factory shutdowns at Christmas and to further prepare for the number plate change in March, when the company’s sales tend to escalate.

Source Credits: https://www.theguardian.com/business/2020/nov/30/uk-carmakers-plead-for-clarity-as-they-stockpile-parts-and-cars-for-brexit