An eleventh-hour post-Brexit trade deal struck between the UK and the EU has been welcomed by the fleet and leasing industry.
It had faced a significant rise in costs, with tariffs imposed on cars and vans, if no deal had been agreed when the UK exits EU trading rules on Thursday (December 31).
However, while business will now have to adapt to the new trading rules and work through the detail of the deal, the expected hike in vehicle prices of several thousand pounds has been avoided.
Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), said that the Brexit trade deal comes as a “big relief” for the industry and provides a “welcome boost” for the UK automotive sector, which can now plan with more “confidence and certainty”.
“Avoiding tariffs on vehicles and parts is essential,” he added, “but with the end of the transition period only days away, there is a lot to be done to prepare for January and beyond as details around the new trading terms become clear.”
Mike Hawes, chief executive of UK automotive business group, the Society of Motor Manufacturers and Traders (SMMT), also welcomed the agreement.
However he said: "We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation.
"A phase-in period is critical to help businesses on both sides adapt and efforts should now be sustained to ensure seamless implementation, with tariff-free trade fully accessible and effective for all from day one."
Hawes said that the SMMT will continue to work closely with Government to ensure all companies are "as prepared as possible in the limited time left.”
Fleet News reported in November, how BMW has announced a customs duty related increase of more than £3,000 on the recommended retail pricing (RRP) of the BMW i3, irrespective of whether there is a free trade deal or not.
BMW had announced at the beginning of October that BMW i3 models, along with the majority of other BMW models, would be subject to an “economic increase” in the recommended retail price rise from January 1, 2021.
Due to changes in the ‘Product Specific Rules of Origin’ legislation, it says that the maximum permitted content of non-EU and non-UK materials means these models will be subject to additional tariffs after the end of the Brexit transition period.
This will be the case, it said, “whether or not there is a free trade agreement with the EU”, which means a further increase in the RRP of BMW i3 models is needed.
Stephen Haddrill, director general of the Fleet and Leasing Association (FLA), said: “As always in trade talks, the devil is in the detail but we appear to have a deal that will enable UK goods to be sold without tariffs or quotas in the EU market – that bodes well for business confidence, leading to renewed investment and lending as we enter 2021 and begin the long economic recovery from the Covid impact.”
Businesses urged to prepare
Logistics UK (formerly the Freight Transport Association), while welcoming the deal, warned that there was still a lot of work to be done to protect the nation’s supply chains, and the economy as a whole.
Elizabeth de Jong, policy director at Logistics UK, said: “A deal is great news for the UK economy, since it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth.
“We are still absorbing all the details, but it looks as though HGVs will continue to have access to the EU market, and aircraft will still be permitted to fly to and from the EU, which safeguards the UK’s highly interconnected supply chains and protects the jobs of those charged with keeping the country stocked with the goods it needs.”
Meanwhile, Logistics UK is urging traders to continue to get ready for new trading conditions as they were before. “The new trading relationship will still require many of the same preparations, not least the introduction of customs declarations and additional checks on food and livestock,” added De Jong. “Logistics UK is advising traders not leave paperwork to the last minute, or ignore it, as this will cause delays to journeys.”