Brexit has drastically affected a range of industries here in the UK, but those who import cars and manufacturers who rely on car exports, have certainly felt the impact. There are some huge brands that make up the British automotive industry and all of them heavily rely on importing and exporting cars and car parts, assembling these vehicles at sites across the UK.
Brexit has affected all industries that rely on logistics and has been particularly challenging because of the unknown factors that are at play. Additional costs have been hitting manufacturers, not to mention the extra paperwork and regulations as well.
Although we cannot fully know the effects that Brexit will have on the industry as a whole in the future, streamlining the logistics process at every part of the supply chain will be very beneficial to the industry. As automotive businesses need to have reliable ways to move goods and have efficient connections globally and as well as within the EU, they could see many benefits by revolutionising this process post-Brexit.
The Challenges Brexit Has Posed for the Automotive Industry and Its Supply Chain
“The automotive industry is a vital part of the UK economy, generating 12% of total exports and a turnover of £82 billion.” (Deloitte 2019)
The automotive industry hugely relies on the ability to export and import cars and car parts and as Brexit brings more charges to these activities, this will pose many challenges for the industry. In the UK, there is a strong presence of British automotive brands, supplying cars to the rest of the world and particularly the EU.
From Aston Martin to Jaguar, Mini and Mclaren, there are many different car brands that will be affected by these changes. British car manufacturers rely on being able to import parts for their cars, assembling them in the UK and export them to suppliers all over the world. However, Brexit is affecting every part of the supply chain.
Because trade deals and many other rules and regulations have not been fully finalised, it is difficult to predict and react to the changes that are to come. Now that we have left the EU, some changes have already occurred that have challenged the automotive industry and it is safe to say there are many more challenges to come.
Why Brexit Is Drastically Affecting the Automotive Industry
Importing Car Parts Has Become More Expensive
The automotive industry in particular heavily relies on the ability to import and export cars and car parts and with the new Brexit rules now in place, this is becoming an ever more complicated and costly process. The majority of British car manufacturers need to import materials and parts from abroad and assemble their cars in Britain.
Many cars are made of anything from 60% to 70% of imported parts and because VAT has increased since we left the EU, this part of the supply chain has become more expensive as VAT is now applicable on imported goods when before it was not. Although British cars are assembled in the UK, they heavily rely on being able to get certain parts and materials from elsewhere.
Increasing Charges for Exporting British Cars
Once the cars have been assembled, they then need to be distributed and sold. Currently, 8 out of 10 British cars are exported all over the world and 51% are exported to the EU (ACEA 2020). Not only does the automotive industry rely on importing and exporting at the beginning of the supply chain, but at the end too.
With both car parts and the finished vehicles being taxed when leaving and entering the country, this makes so many parts of the construction supply chain expensive. These extra expenses are bound to have an impact on overall profit and the price of the car, meaning consumers are likely to pay for more classic and luxury British cars.
More Paperwork and Regulations
Brexit has been a large unknown for many industries and with extra VAT, charges and paperwork, this has had all sorts of knock-on effects. Filling out extra forms and paperwork takes up time for businesses, with employee time and resources being taken up by these extra requirements.
When either cars or their parts are crossing UK borders, they also need to be checked against this paperwork. This was the cause of huge delays and congestion at UK ports during early 2021 and still means that this process is slower post-Brexit.
Car passports are just one of these extra regulations, which are proving challenging for those at various points in the supply chain from car collectors, auctioneers and manufacturers. Every vehicle now requires an ATA (Access/Temporary Access) Carnet, which is a bond every car requires and is equivalent to the value of the vehicle.
Impact on the Automotive Industry
- More costs due to tariffs and taxes when importing and exporting to the EU “A 10% tariff on exports is projected to cost £1.8 billion” because the UK no longer has the same import and export rules
- With extra administrative processes, importing and exporting will be a slower process with more paperwork, not to mention huge expenses due to car ‘passports’
- Factory locations changing could mean changes to supply routes, more logistics needed to move materials as well as the finished product
- Uncertainty, renegotiating current commercial contracts and being reactive to future trade deals and the changes they bring
How Klearnow Can Benefit from Importing and Exporting Cars & Car Parts
The automotive industry heavily relies on being able to import and export cars and car parts and so needs this process to be efficient, cost-effective and simple. As a logistics company, KlearNow specialises in the movement of goods coming into the UK and exiting it, so by using our AI, cloud-based technology, we can revolutionise your supply chain and the impact of Brexit.
There are many issues with logistics that many businesses are currently facing such as manual paperwork, lack of real-time data about the movement of goods and an overview of the whole importation or exportation process, that can allow you to make informed decisions. KlearNow’s technology tackles this in different ways, giving you more up-to-date information and a transparent overview of the whole logistics process, which is hugely beneficial to the automotive industry.
Some of These Benefits Include:
- Always up-to-date on where your materials are when importing and exporting
- Digitised documents which make clearing customs quicker
- Simplifies communication between all parties, speeding up the process
- One flat fee makes financing clearer and more straightforward
Klearnow’s Automotive Case Study
To see how our logistics technology has benefited a large automotive car manufacturer in Manchester, take a look at our case study, to see how we helped tackle problems that arose from Brexit.
Whether you want to import cars from Germany, know more about logistics and cars and car parts or find out how KlearNow could help make car exports more cost-effective, you can get in touch. You can also read more on industry-related topics on our blog today.