10 oct 19

VW builds up stocks ahead of Brexit, but prices still likely to rise

A hard Brexit is still possible on October 31st and that is why many companies are increasing their reserves. One the one hand, these reserves can mitigate the effect of import tariffs, on the other they could be necessary if the trade agreement (or lack thereof) causes hiccoughs in the supply.

Volkswagen, too, is taking measures: “We have optimized inventory levels upwards to delay the impact of potential import tariffs for a while, but there are limits to what can be done," VW brand sales and marketing chief Juergen Stackmann, told Reuters.

"If there are tariffs, we will not be able to absorb them or compensate the cost. We need to be realistic about the fact that cars would get more expensive for customers," he said.

ACEA expects seismic effect from no-deal

On September 23rd, the European Automobile Manufacturers Association (ACEA) and the European Association of Automotive Suppliers (CLEPA) warned for the catastrophic effects of a no-deal Brexit.

They claim that the UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with “billions of Euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel. The end of barrier-free trade could bring harmful disruption to the industry’s just-in-time operating model, with the cost of just one minute of production stoppage in the UK alone amounting to €54,700 (£50,000).”

Fleet Europe Remarketing Forum

The effects of Brexit will also be felt in the used car business. A no-deal could cause a residual value increase of young second-hand vehicles if supply of new cars is interrupted. This topic will be discussed at the upcoming Fleet Europe Remarketing Forum in Estoril, Portugal on November 6. The full programme can be found here.

Authored by: Dieter Quartier