Analysis
24 Sep 19

Fleets caught in Brexit turmoil

Fleet operators face the monumental challenge of keeping the wheels of their businesses turning, despite the political chaos that has engulfed the UK. Yesterday (Tuesday) saw the country’s Supreme Court rule that Prime Minister Boris Johnson's decision to suspend (prorogue) parliament was unlawful.

The British parliament has already legislated that the UK cannot leave the European Union without a withdrawal agreement. In theory, this should remove the danger of a ‘no deal’ Brexit that would transform the trading relationship between the UK and EU to World Trade Organisation (WTO) rules, although suspicions remain that Prime Minister Boris Johnson will resort to any means to achieve Brexit by the end of October.

10% tariffs on new cars

WTO terms would see 10% tariffs added to any new cars crossing the Channel in either direction, driving up total costs of ownership for fleets. The UK exports 56% of vehicles it produces to the EU and 70% of vehicles sold in the UK are EU imports. This massive volume of trade led the European automotive industry to unite this week in calling for the UK and the EU to avoid a ‘no deal’ Brexit. The European Automobile Manufacturers Association (ACEA) and European Association of Automotive Suppliers (CLEPA), as well as 21 national associations, claim the application of WTO tariffs on cars and vans could mean a €5.7bn bill for EU/UK industry and consumers.

Bernhard Mattes, President of Germany’s automotive manufacturers's association, the VDA, said: “The EU and UK automotive industry need frictionless trade and would be harmed significantly by additional duties and administrative burden on automotive parts and vehicles.”

OEMs are worried

As the EU’s second largest new car market, manufacturers across Europe are concerned by any measures that might impact sales.

Mario Armero, Executive Vice President of Spain’s automotive manufacturers' association, ANFAC, said: “The Spanish automotive industry sells two thirds of its production outside our frontiers. The United Kingdom is one of the main markets for these sales and, since Brexit was voted, exports have fallen exponentially. The establishment of tariffs and trade barriers worries us.”

However, the apparent determination of Prime Minister Johnson for the UK to leave the EU on 31 October, has left many commentators fearful that the Government will find a legal loophole to deliver Brexit by this deadline, even if this means a ‘no deal’ departure.

'No deal' implications

Should a ‘no deal’ Brexit happen, British fleets will rapidly need to apply for an insurance Green Card - an international certificate of insurance - for every vehicle driving on the continent or in Ireland. The same applies to drivers visiting the UK from the European Economic Area (EEA) which includes the EU plus Iceland, Liechtenstein and Norway, as well as Switzerland.

The UK Government has said driving licence holders from the EEA can continue to drive on valid licences in the UK in the event of a ‘no deal’ Brexit, although UK drivers will require an International Driving Licence to drive in the EEA.

Visas for travel

If a ‘no deal’ Brexit does occur, UK citizens will have visa-free travel within the EU’s Schengen Area for up to 90 days, before having to abide by any local visa requirements. UK citizens will also need at least six months left on their passports from their date of arrival in the EU.

The UK Government has aleady reached an agreement with the EU that will protect the rights of EU, Norway, Iceland, Liechtenstein and Switzerland citizens and their family members living in the UK. These citizens will need to apply to stay in the UK, and can then continue to live in the UK as they do now.

Authored by: Jonathan Manning