Brexit discussion thread VII (Please read OP before posting)

murphaph

ToBeFrank123 wrote: »

A hard Brexit would not be ideal for European car manufacturers either.

I would imagine a lot of high end cars, especially German cars, like Mercs, Audis, BMWs are sold in the UK. A hard Brexit will hit sales if tariffs are applied.

The UK is a huge car market so I don't think the car makers can abandon manufacturing there fully.

Brexit really is a lose-lose for everyone, particularly the European car makers. However, if tariffs were not applied to electric vehicles it might encourage the car makers to prioritize these models so there might be a win there. Wishful thinking possibly.

It's a large market today but only a handful of mainly Japanese companies actually manufacture there and that's mostly for export.

Junkyard Tom

I think I'd be quite depressed at the thought of Mini upping sticks from Britain if I was British.

It'd be like a metaphor for Brexit with regards to British manufacturing -- a once great British brand revived by a multinational and then extracted and relocated due to the incompetence of Brexit fundamentalists.

prawnsambo

VinLieger wrote: »

No your right, ive had to do a fair bit of digging through needlessly uninformative and obtuse government info to figure it out, there's affirmative and negative ones, negative ones are just signed by the minister, affirmative have to follow that procedure i linked.

So they can be laid as either affirmative or negative however negative ones must first go through a sifting committees first to decide if they get to stay negative or be upgraded to affirmative depending on how those committees rate their importance and therefore need for a HOC vote.

I did a bit more digging and now have a fair idea of what they are. There are the normal type of ministerial order that I referenced earlier which just require a signature to become law. The 'negative' and affirmative SIs are also given authority by primary legislation and it's that legislation which dictates what type of SI they will require. An affirmative SI requires parliamentary approval to become law, whereas a negative SI will become law provided that nobody objects to it within a certain time frame - usually 40 days.

The negative type is the most frequently used, but it strikes me in the context of brexit, that the 40 day requirement for any negative SI that's laid now, means that it will not become law before brexit day.

kunst nugget

Junkyard Tom wrote: »

I think I'd be quite depressed at the thought of Mini upping sticks from Britain if I was British.

It'd be like a metaphor for Brexit with regards to British manufacturing -- a once great British brand revived by a multinational and then extracted and relocated due to the incompetence of Brexit fundamentalists.

What about Dyson? That fooker advocates for a No vote and then moves production to Malaysia. How is that not enraging people in Britain?!?!

murphaph

ToBeFrank123 wrote: »

But that would mean a tariff which could be around 20% - I'm not sure of WTO rules around manufactured goods.

So a 50K car becomes a 60K car. 10K is a lot when buying a car.

Likewise they could manufacture within the UK and sell it within the UK for 10K less. It could in turn mean more new jobs in the UK for suppliers of car parts.

You'd wonder how countries survived before the SM!

It'll mean a smaller choice of cheaper cars with many shared components right up to engines and gearboxes. All in all it will mean fewer jobs though. The UK components sector doesn't just make components for UK factories, but EU ones too. That export market would dry up and it's a much larger market than the domestic one.

ToBeFrank123

People may find this useful. I just came across it now. Gives a breakdown of sales per country. The UK is a huge market that car makers can't afford to do without. It will certainly hit their profits.

https://www.simi.ie/en/motorstats/european-vehicle-statistics

First Up

ToBeFrank123 wrote:

But that would mean a tariff which could be around 20% - I'm not sure of WTO rules around manufactured goods.

So a 50K car becomes a 60K car. 10K is a lot when buying a car.


Likewise they could manufacture within the UK and sell it within the UK for 10K less. It could in turn mean more new jobs in the UK for suppliers of car parts.


You'd wonder how countries survived before the SM!

All cars produced in the UK contain imported components. One tariff on the finished product may well be prefereable to (and less costly than) tariffs, delays and uncertainty on the hundreds of components that will still need to be imported from the EU.

Sam Russell

ToBeFrank123 wrote: »

But that would mean a tariff which could be around 20% - I'm not sure of WTO rules around manufactured goods.

So a 50K car becomes a 60K car. 10K is a lot when buying a car.

Likewise they could manufacture within the UK and sell it within the UK for 10K less. It could in turn mean more new jobs in the UK for suppliers of car parts.

You'd wonder how countries survived before the SM!

Well, it is not as simple as that.

If I drive down to my UK dealer (I do not live in the UK, so hypothetical) and look for a price to change my German car, say currently £50,000 new, and wish to trade in my 3 year old one, I will be offered say 50% of the new price for it. After Brexit, I will still be offered 50% of the now raised price - so it will only increase the price I pay by 5% - no biggie if I can afford to buy one in the first place. Remember, a while back, Mercedes reduced the Irish price across their entire range by 10% - so there might be room to absorb some of this.

Now, if Honda, Nissan, BMW, Ford, Opal, and Toyota all cease production in the UK, then the market will have to pay 10% more for their new cars. Second hand cars will see a price recovery, and the market will shrink by about 5% - that is all. The cheaper cars suffering the most.

Now it is likely that there will be a run down of manufacturing in the UK with no new models, and old models being kept in production for far longer than normal. They still produce the old Austin A55 in India - now called the Ambassador - a 60 year old design.

In a no-deal scenario it would be prohibitive to continue production in the current manner. They would have to scale back immediately because JIT would be impossible and holding sufficient stocks prohibitive.

josip

Those who previously could afford a £40,000 Audi may instead have to settle for a £40,000 VW.
Or they could instead skip the summer holiday which will have become more expensive anyway and use the savings to still afford the Audi in the drive.
They could even claim that on principle they're refusing to go on holidays in the EU after the way the EU bullied them out during Brexit.
"My new S4 is a nice motor, innit?"

ToBeFrank123

First Up wrote: »

All cars produced in the UK contain imported components. One tariff on the finished product may well be prefereable to (and less costly than) tariffs, delays and uncertainty on the hundreds of components that will still need to be imported from the EU.

Yeh that's a fair point. It would be hard for the UK to switch to exclusively home grown production of parts. Tyres and tyre rubber is an obvious example of parts coming from overseas.

Leroy42

But no manufacturer will do without the UK market, car sales won't stop.

But the manufacturers are faced with a decision. Continue to manufacture in the UK with the additional admin costs and tariffs to be able to reduce the impact on prices in the UK but face bigger costs in the EU, or move production to the EU and maintain prices as they are in the EU and face higher prices due to tariffs for the final product in the UK.

Which one do they choose? Well, its pretty obvious and we already have the answer from the likes of Toyota and Nissan.

The UK is not a big enough market on its own to maintain production just for the UK market, the factories make sense because they export to the rest of the EU (and further afield in some cases). The facilities are not profitable based on the much smaller numbers.

But people in the UK won't stop buying cars, but like us in Ireland, they will simply move to an import based 'industry'. The major problem is that the UK have a very large Car manufacturing industry at the present time and thousands of jobs and thousands of linked jobs will be at risk. And once they go it is very hard to get them back.

murphaph

ToBeFrank123 wrote: »

People may find this useful. I just came across it now. Gives a breakdown of sales per country. The UK is a huge market that car makers can't afford to do without. It will certainly hit their profits.

https://www.simi.ie/en/motorstats/european-vehicle-statistics

Of course it will. Brexit is just adding cost to all business.

VinLieger

ToBeFrank123 wrote: »

People may find this useful. I just came across it now. Gives a breakdown of sales per country. The UK is a huge market that car makers can't afford to do without. It will certainly hit their profits.

https://www.simi.ie/en/motorstats/european-vehicle-statistics

But your still stuck on this false narrative that now no cars will be sold in the UK, they will still be bought just at a higher price, they may sell less but the market is not going to completely vanish.

First Up

ToBeFrank123 wrote:

Yeh that's a fair point. It would be hard for the UK to switch to exclusively home grown production of parts. Tyres and tyre rubber is an obvious example of parts coming from overseas.

There's about 30,000 components in the average car. Tyres are the least of it.

ToBeFrank123

VinLieger wrote: »

But your still stuck on this false narrative that now no cars will be sold in the UK, they will still be bought just at a higher price, they may sell less but the market is not going to completely vanish.

Volume and economies of scale are as crucial to car sales as any other business.

So if you sell 100,000 cars, you may not make anything on the first 80,000 cars but its the final 20,000 where the profit is due to economies of scale.
Design, testing, building manufacturing facilities all have to be paid for and take up large costs.

So yes if car companies lose 5-10% of their market, it could make a difference to their profit margins and cause problems for some companies.

Its for reasons like this the big car manufacturers need big markets like the UK. Even a 5-10% decline in sales could be a major issue for them. They will have to rethink their strategies, be less ambitious, lay a lot of people off. The UK is one of the richest countries in Europe so its the marque brands who will suffer most.

demfad

murphaph wrote: »

It would be time for remainers to get off their backsides and vote in numbers for pro-EU MEPs, to send a clear signal to the EU that there is something to fight for. If Farage could be removed it would be a triumph. They only get in there because historically nobody paid much attention to EU elections. That should change.

It's done on a list I believe so Farage would be first in for the new party.

There are other reasons Farage might be removed.

In 2016 UKIPs fundraiser George Cottrell was arrested in O'Hare airport in Farage's company after the RNC convention.

The charges were serious (including money laundering) and could have amounted to 20 years maximum. They ended up giving him the 8 months as he had plea dealed and offerred support.

One of the Guardian's allegations against Banks and Wigmore re Russian ambassador and embassy in London was that details of the charges against Cottrell were passed to Russian officials via email.

The rumblings seem to be that the money laundering divisions in the Met will move on Farage in the next 6 weeks. That information was from a group called far right watch who have been reliable till now.

That would hammer a blow to Farage and his party.

He would still have to run to avail of any impunity elected representation offered.

Junkyard Tom

kunst nugget wrote: »

What about Dyson? That fooker advocates for a No vote and then moves production to Malaysia. How is that not enraging people in Britain?!?!

Dyson sucks alright but Mini seems more... emotive. Mini is an iconic British brand from a time when Britain was economically and culturally buzzing.

And there's the whole Italian Job thing the Brits love, likely lads off abroad to plunder some gold bullion like the good ol' days. Good caper movie of a Sunday afternoon that was, back in the day.

kunst nugget

'We'll make cars more expensive for us to buy. That'll show them!!!' always seemed like a slightly strange argument to me.

First Up

ToBeFrank123 wrote:

Volume and economies of scale are as crucial to car sales as any other business.

Economies of scale apply far more to production than sales. German, French and Italian cars will still command brand loyalty and have the service and parts networks in place.

ToBeFrank123

kunst nugget wrote: »

'We'll make cars more expensive for us to buy. That'll show them!!!' always seemed like a slightly strange argument to me.

That's the price of no deal. It should focus minds in the HoC.

Leroy42

ToBeFrank123 wrote: »

Volume and economies of scale are as crucial to car sales as any other business.

So if you sell 100,000 cars, you may not make anything on the first 80,000 cars but its the final 20,000 where the profit is due to economies of scale.
Design, testing, building manufacturing facilities all have to be paid for and take up large costs.

So yes if car companies lose 5-10% of their market, it could make a difference to their profit margins and cause problems for some companies.

Its for reasons like this the big car manufacturers need big markets like the UK. Even a 5-10% decline in sales could be a major issue for them. They will have to rethink their strategies, be less ambitious, lay a lot of people off. The UK is one of the richest countries in Europe so its the marque brands who will suffer most.

But what alternative do the British consumers have? They cannot buy British, but even if they could they are going to increase in price as well. Volumes may decline, but its hard to see that a market so entrechened in the car buying market will suddenly opt to keep older cars and cheaper models.

And what will probably happen is that basic spec cars will start to be sold, lowering the advertising price to maintain at current levels but without alloy wheels, ICE etc etc.

This is obviously not good for the manufacturers, but then they never asked for it and will try to find solutions, such as the lower spec, to reduce the impact on them.

The these issues are nothing in comparison to the loss of manufacturing within the UK. The number of jobs, the number of associated jobs (deliveries, canteen workers, builders for new homes etc etc) is massive and even the loss of prestige will have knock on effects.

Car manufacturing was a jewel that the UK had, and they worked very hard to get it. Thatcher pulled off a major coup in getting the Japanese to invest, and they would have faced stiff competition from the likes of France, Germany and others. And now they are simply watching it walk out the door, in fact helping them in their way.

They have no plan on how to replace the jobs, what the new industries will be and by leaving the EU they are limiting the options available to themselves.

briany

kunst nugget wrote: »

'We'll make cars more expensive for us to buy. That'll show them!!!' always seemed like a slightly strange argument to me.

"I don't mind cars getting more expensive after Brexit. It's a small price to pay."

"The extra money means I'll probably keep it longer. On balance it works out the same."

"Less cars being made means less resources used and emissions produced. Maybe less cars on the road, too. Brexit will help the environment."

"It will be an opportunity for a car manufacturer to come along who only sells to the domestic UK market. Brexit will give rise to an exclusively British car, sold exclusively to British people! Rah!"

etc.

prawnsambo

ToBeFrank123 wrote: »

You'd wonder how countries survived before the SM!

There was a good deal less international trade back then (I think the traffic through Dover has quadrupled). The single market made it a lot easier for specialist manufacturers to grow and provide components for other manufacturers and that's why you now have British made Nissans that have parts coming from all over Europe that go together to make the final end product.

Regarding the possibility of the UK plants just manufacturing for the UK market, aside from the problem of getting parts in, it would leave the UK buyer with a very narrow choice of models. Honda just make the Civic and CR-V in Swindon, Nissan make the Qashqai, Juke, Note, Inifiniti Q30 and Leaf models and Toyota make the Auris and Avensis.

So if you want any of those plus an Astra, Mini, Range Rover, Defender or Discovery, a Jag, Lotus, Rolls Royce or Bentley and a few more niche models, you're grand.

But since all of those are manufactured in the majority for export markets (80% - of which 40% to EU), they will undoubtedly fall foul of the rules of origin, which stipulate that 60% of the product must be made locally in order to avoid much higher tariffs. The average for UK built cars is 44%.

Akrasia

Kermit.de.frog wrote: »

In relation to Theresa May, the Tory party thought they were getting a Thatcher when they put her in

How wrong they were. Even if it was Thatcher she'd be in the exact same bind.

:pac:

A real leader would have reached across the aisle to come up with a workable solution to the most pressing issue to affect the UK in generations.

A real leader would have investigated the causes of the result of that referendum, both in terms of the illegal activity that may have swung the result, and the public sentiment behind the reasons for large leave vote. Instead of doing this, May has simply invented her own interpretation of the result and what she thinks the 'will of the people' is

Seth Brundle

Junkyard Tom wrote: »

Mini is an iconic British brand from a time when Britain was economically and culturally buzzing.

And there's the whole Italian Job thing the Brits love, likely lads off abroad to plunder some gold bullion like the good ol' days. Good caper movie of a Sunday afternoon that was, back in the day.

They are two very different brands though and people link the two simply because they want to:
Mini = Michael Caine, some gold & British pride, etc.
MINI = German car, massive in size when compared to the Mini

Akrasia

ancapailldorcha wrote: »

German car manufactures are and were always going to prioritise the single market's integrity over maintaining access to a capricious United Kingdom.

Not just them. Any manufacturer who have cross EU operations and use JIT logistics will be looking at exiting the UK if there is any kind of delay at the border or tariffs on their goods as they are sold into Europe

Akrasia

ToBeFrank123 wrote: »

A hard Brexit would not be ideal for European car manufacturers either.

I would imagine a lot of high end cars, especially German cars, like Mercs, Audis, BMWs are sold in the UK. A hard Brexit will hit sales if tariffs are applied.

The UK is a huge car market so I don't think the car makers can abandon manufacturing there fully.

Brexit really is a lose-lose for everyone, particularly the European car makers. However, if tariffs were not applied to electric vehicles it might encourage the car makers to prioritize these models so there might be a win there. Wishful thinking possibly.

There is no chance that the high end German car sales would completely dry up even in the event of a a no deal Brexit. They might fall by 10-20% in the short term, but anyone who thinks that the german car industry faces a meltdown if the UK leaves the EU are talking nonsense.

Wealthy British people will still buy German cars. The biggest risk is that the UK collapses into recession as it's financial services industry collapses post Brexit, but this just means those high end jobs get moved to Frankfurt or Dublin or Zurich or wherever, the customers wouldn't disappear, they'd just have different coloured license plates.

Junkyard Tom

Seth Brundle wrote: »

Mini = Michael Caine, some gold & British pride, etc. MINI = German car, massive in size when compared to the Mini

Oh I'm fully aware of the differences. The modern Mini is essentially a BMW but the brand itself is a British one, or at least was, but is now owned by BMW.

Akrasia

Junkyard Tom wrote: »

Oh I'm fully aware of the differences. The modern Mini is essentially a BMW but the brand itself is a British one, or at least was, but is now owned by BMW.

Other than Caterham and some of the tiny kit car manufacturers, there are no British owned car manufacturers anymore.

Even Lotus is owned by Geely, a Chinese company

prawnsambo

This is from the SMMT which represents the UK car industry. Gives a very good picture of how the whole industry works.