The Brexit transition period comes to an end on 31 December 2020, and from 1 January 2021 the UK will no longer have access to the tariff arrangements within the EU’s single market and the customs union.
This means new rules will then apply, in particular if tariffs are added to imported goods, it could have an impact on the price we all pay for them, such as vehicles and parts to keep them running.
Like many other businesses in the UK, the impact and implications of Brexit have been a keen area of focus for Arval for quite some time and we’re doing all we can to minimise any impact on service to you.
To help keep you informed, we’ve compiled some key questions and answers for you below.
Arval UK Commercial Director
What could happen if a zero tariff trade deal isn’t secured?
While talks continue between the UK and Europe, our industry is still awaiting clarity from the Government to confirm any potential impact that tariffs may have on access to imported vehicles and products – this could have an effect on their future prices.
Our industry’s trade bodies and the UK Government is working to help secure a zero-tariff trade deal, however, as we get closer to the deadline, we need to make you aware of some potential implications for new vehicle orders and services.
Could the price of a new vehicle on order change?
If a new vehicle order is affected by a tariff, your Account Manager will be in touch with you.
The situation is relatively complex, but current Government analysis indicates that if a no-deal situation occurred, that World Trade Organisation tariffs could apply to vehicle imports. For cars, this is 10% and for Light Commercial Vehicles different tariff rates may apply.
Vehicle manufacturers are also preparing for a no-deal scenario and are deciding if tariffs will be applied to the cost of new vehicle orders.
If a manufacturer does apply an import tariff to a vehicle order, it will in turn be added to the price of the order. However, should the increase make the vehicle ordered unaffordable, please discuss this with us as quickly as possible.
What about servicing, maintenance and repairs?
If a guaranteed maintenance agreement is in place on your existing vehicles, the pricing will not be affected if tariffs are imposed on vehicle parts.
Manufacturers and our supply partners have also been building up a supply of parts to try to reduce any impact during this period of the transition, to help protect against any potential delay.
What about access to electric vehicles?
One of the lesser considered areas associated with Brexit is the access to electric vehicles (EVs) - you may have seen some coverage on this topic.
We have always taken a bold approach to EVs and use our financial strength to purchase large volumes of EVs for our customers.
We recognised that when the UK leaves the EU, registrations of EVs no longer count towards manufacturers’ Corporate Average Fuel Economy (CAFE) CO2 targets. This scheme limits average CO2 emissions for all cars registered in the EU to 95g/km with heavy fines due for each gram over that level on each car. As a result, there could be less incentive for manufacturers to send EV stock to the UK.
Arval has recognised that risk and is working with manufacturers to secure stock of key car and Light Commercial Vehicles (LCV) models into 2021 and beyond. We are also working with our trade body, the BVRLA, and government to help make sure that the UK remains a part of this or a similar regulation which applies to our country in the future.
What about travel to other countries?
On a more practical level, we have compiled with and maintain an up-to-date list of the restrictions and requirements of cross-border-travel to ensure that our customers and their drivers always have the latest knowledge of the regulations.
After Brexit, it is expected that:
- All GB vehicles will need to display GB stickers, regardless of whether they have a GB icon on their number plate
- Drivers are likely to need a “green card” from their insurer and a driver permit to drive in Europe, which for customers with Arval Total Care can be obtained by emailing: TotalCare@arval.co.uk
- If the contract includes a guaranteed maintenance agreement the breakdown cover provided will continue to include the EU
Is there more information on Brexit?
For more information and the most up to date positon on the trade negotiations visit gov.uk.
As always, your Arval Business Manager is available to discuss any questions you may have.