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Manufacturers stance on Brexit

Posted on 27 Feb 2019

9 min read

With Brexit just around the corner, in whatever shape it may take, Ogilvie Fleet would like to update our clients on the position of all our automotive suppliers. We are in constant communication with all of our suppliers and will update this page as and when we have further information.


Volkswagen Group UK, as a responsible company, is preparing for all eventualities, including a hard Brexit, until we can be certain of the approval of the agreement over the UK’s withdrawal from the EU. Our contingency planning has focussed on systems and process changes to enable the importation of cars and parts under all Brexit outcomes. We are also in discussions with our factories to request increased production with the aim of safeguarding Q1 2019 stocking levels to mitigate against the risk of supply constraints resulting from congestion at the UK-EU border for both cars and parts.

If there is a “no-deal” Brexit, arriving in the UK may be subject to import duties/tariffs and it is therefore prudent that we set out clearly to you what happens to the pricing of vehicles if import duties/tariffs are applied.

To give you certainty with regard to your existing customer-tagged orders, we can confirm that we will protect the prices as at the date of these orders, irrespective of whether the vehicles attract import duties/tariffs, provided the specification is not changed. However, we are reserving the right to amend the pricing for any order placed on or after 1 February 2019 if the vehicle attracts import duties/tariffs. Clearly, if any vehicle arrives in the UK before such import duties are applied, its price will not be altered. Further, we are protecting quotations currently raised as at today’s date that have not yet expired, provided they are converted to order by the earlier of (a) the existing quotation expiry date; and (b) 7 February 2019. Please note this policy does not apply to Audi vehicles.


As a responsible business, we are looking at our options and taking steps to make sure we are prepared for a worst case scenario. Our preparations permeate all key areas of our UK business operations and we have a number of taskforces working to put mitigation measures in place. These measures are designed specifically to protect the continuity of customer vehicle and parts supply, and to identify and mitigate against any risks or potential impacts of changes to interest rates, liquidity and IT systems.


Mercedes-Benz has the clear objective of ensuring that goods can continue to enter and exit the UK in a timely manner following the UK’s exit from the EU. We are constantly monitoring the status of negotiations, and have plans in place to ensure that our objective is met should the UK exit the EU without a transition period on 29 March 2019. These plans cover all relevant topics e.g. the supply and movement of goods, customs procedures and logistics.

Jaguar/Land Rover

Contingency planning is ongoing, but we are focused on working with government to get the right deal and avoid a no deal, which is not an option for business. We need the right deal post-Brexit. The wrong Brexit deal or no deal would cost the company more than £1.2bn profit each year. To remain competitive as a business and continue to invest heavily in UK, we urgently need the government to provide certainty for business, including guaranteed tariff-free access and frictionless trade with the European Union.


Volvo Car UK is taking all steps to ensure that we will be able to operate smoothly when the UK leaves the EU in March 2019. Within Volvo we have a number of internal projects in place managing the risks this change will bring; these projects include supply chain requirements, custom processes and the movement of people. Naturally, our planning reflects a number of scenarios including a ‘no deal’ Brexit.


Ford is planning for a range of possible Brexit scenarios and timelines. A no-deal “Hard” Brexit– i.e. no UK-EU free trade agreement and default to a WTO tariff regime – would severely and negatively impact the UK automotive industry. This is a worst-case scenario and is not our current base planning assumption. Nonetheless we are monitoring the situation closely, and have prepared contingency plans should the UK leave the European Union on 29th March 2019 with no withdrawal agreement in place. In a no-deal Hard Brexit scenario, Ford will take whatever action is necessary to protect our business, customers, and other partners, to minimise disruption and ensure business continuity. Our contingency planning is looking in detail to maximise the opportunities available as a result of operating our own dedicated port of entry in Dagenham, which may help avoid some of the expected increases in congestion at major ports of entry, as well as the capabilities in place today for importing vehicles from outside the EU in operation at both Southampton and Liverpool ports. Ford has taken many measures to protect vehicle and parts supply, however there remain many factors that are outside of our control, therefore it is impossible to guarantee that we can mitigate against every eventuality and unintended consequence resulting from a ‘no deal’ exit from the EU.


PSA operates a standalone parts operation in the UK and is in the process of increasing stock held at both warehouse and at the 28 Distrigo Hubs that supply the PSA network of Authorised Repairers.


In line with Hyundai Mobis European strategy to take control of its core business Hyundai Mobis UK will take control of the warehouse operation and bring it in-house from the 1st November 2018. This has previously been managed by Unipart Logistics Ltd since 2008. As a result, circa 100 Unipart employees will transfer to the Hyundai Mobis UK operation. This will bring the total number of employees to circa 140. In addition, Hyundai Mobis UK will also take on full management responsibility for their transport partner, XPO logistics. Hyundai Mobis UK are also in the process of completing a 5,000 Square metre (20,000 Square feet) extension to its existing warehouse facility which is due for completion in Q1 next year to support the continued growth of the Hyundai brand. This significant investment to the facility and structural changes are designed to bring about greater efficiencies and improve capacity and capability to ensure that future growth can be successfully catered for Hyundai, dealers and customers.


The Board of Directors’ formalised a task force focusing on parts supply into the UK and have identified likely sources that could be affected by delays. The counter measure is to increase parts supply from those sources that could be affected. Noting Kia has a minimum of 6 weeks lead time on parts from Korea stock levels have already been increased. The UK warehouse is the supply for all Righthand-drive vehicles parts. Parts transiting through mainland Europe are a primary focus and as the ramifications evolve Kia will continue to monitor and take the appropriate action.


Since 1986, the UK has been a production base for Nissan in Europe. Our British-based R&D and design teams support the development of products made in Sunderland, specifically for the European market. Frictionless trade has enabled the growth that has seen our Sunderland plant become the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU. Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like. As a sudden change from those rules to the rules of the WTO will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.”


From a parts perspective we have scheduled additional stock builds to be in place across a broad range of products prior to 29/03/19 which will primarily be based around high demand stock.


We have been working on this project through the year and have identified areas of risk as we move closer to the Brexit date. We will be reviewing stock levels during this quarter to ensure we are ready for all eventualities.


The uncertainty of Brexit is proving difficult to anticipate the necessary requirements. Our management teams are in discussions on what we plan to do, all I can say at this point is we are looking at holding as much parts stock as possible.


Short-term we don’t have an issue even if it’s a hard Brexit because we have a UK based warehouse however mid-term strategy depends upon what deal the UK makes with the EU. Either hard or soft Brexit, the Inventory in Milton Keynes will be assumed to be already imported into the UK on the 29th March, so initially we can feed from that with no affect plus we have also requested an increase in stock levels in the UK to cover the expected customs chaos from April onwards. We have applied to make the UK warehouse and are debating if we should make the Magyar warehouse bonded, to allow SGB to still have full participation in the European parts hub and spoke process; this means we can transfer parts duty free between warehouses, duty is paid at point of sale and we carry on as we are today, although with higher costs as we will either have to pay duty and have a customs system or even, with no duty we will still have to have the customs system, which means we will need import / export headcount increase too. Last resort strategies: a) Continue to operate as we are and pay 10% on everything until we can implement a customs system. b) Come out of the hub and spoke strategy altogether, receive parts direct from the factories as we did pre 2009 but that means a customs system, ERP system and additional staff (IT and Inventory Control and import / export)


The Vauxhall Warehouse holds up to 6 – 7 weeks of stock to maintain high First pick rates. If required further measures can be activated at short notice to bring in additional stock from the source Warehouse in Bochum, Germany.


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