No-deal Brexit could see fleets extend cycles
Supply chain management specialist Fleet Assist is warning that increased vehicle prices from a hard Brexit could see fleets return to longer replacement cycles while also having to deal with increased vehicle downtime at garages.
Recently published SMMT figures suggest a no-deal Brexit could add £1,500 to cost of imported new cars while the organisation has also said that it would bring an average 4.5% tariff on components.
In response, Fleet Assist, which works on behalf of many of the UK’s major contract hire and leasing companies, says that 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 WLTP governing car and van homologation.
Although Karen Ewer, Fleet Assist’s newly promoted head of business development, said that extended replacement cycles – and the resultant increase in the age of cars and vans – should not be seen as a concern by the industry, 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,” she added.
Meanwhile the business, which is taking action to keep its customers and its network of more than 5,000 garages aware of the issues a ‘hard’ Brexit could lead to, is also working to mitigate delays in the supply of imported parts due to stricter border control, which could also impact vehicle downtime, as most garages operate a ‘just-in-time’ parts ordering process. 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.
Ewer warned: “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.”
However, she 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.
Ewer continued: “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.”