Brexit: Trading on WTO rules could ‘significantly’ affect prices, say truck bosses

Any risk that Britain will leave the European Union in March 2019 without a trade deal could prompt fleets to pull forward their truck acquisition plans to this year (2018). This is the view of Nigel Butler, UK commercial director at Renault Trucks.

“Trading on the basis of World Trade Organisation (WTO) rules and tariffs could significantly affect prices,” he warned. 

“If we have a hard Brexit then import tariffs on new trucks are likely to be in the region of 11% to 16%. If this proves to be the case then it could lead to a lot of pre-buying as customers try to avoid a hike in operating costs.” 

And any sudden bulge in orders could result in longer delivery times, says Butler. “They may take the view that they need to buy more and they need to buy now,” he said.

Such a sales spike would stand in marked contrast to the situation at present. Truck registrations have declined in recent months, according to figures compiled by the Society of Motor Manufacturers and Traders (SMMT). 

“Maybe we’re finally starting to see the impact of Brexit,” said Butler. “I’m certainly detecting a bit more nervousness about the future among our customers.”

He is not predicting a collapse in the demand for trucks, however. “We think the market will decline by around 5% in 2018, to 43,250, unless there is major distortion caused by Brexit,” he said.

SMMT chief executive, Mike Hawes, points to a fall in UK commercial vehicle manufacturing output over the past few months.

“Declining confidence among operators is no doubt affecting production,” he said. “We need urgent clarity on transition arrangements and the nature of our long-term future relationship with Europe to stimulate demand and safeguard the competitiveness of our industry.”

Butler said: “The prospect of no trade agreement looms and passes and looms again.”

Robin Easton, DAF Trucks UK managing director, suggests that without a post-Brexit EU/UK trade agreement imported trucks could face tariffs of between 10% and 20%. He adds that, in his view, leaving the EU is not in Britain’s best economic interests and hopes that the country will do a sensible deal with Brussels.

That said, Easton admits that the lack of a deal could give DAF something of an advantage because it builds vehicles on this side of the Channel at its Leyland, Lancashire, assembly plant. 

“There would be a duty of 4.5% on the components we import,” he said, which would be significantly lower than the duty on imported trucks that all its competitors would face.

“Under WTO rules we would fare better than our rivals,” he added.

The components DAF imports include cabs shipped in from Renault’s factory in Blainville in northern France. Easton anticipates a truck market of around 41,000 in 2018.

In Butler’s view, what he refers to as the patchwork implementation of environmental and safety regulations governing the types of truck that are allowed into urban areas around the UK appears to be as big a threat to market stability as Brexit.

“Renault Trucks welcomes any initiative to improve road safety and the health of the nation, but uncoordinated, city-specific regulation must be stopped,” he said. “I am very concerned that piecemeal local legislation will seriously impact operator efficiency and therefore the cost of delivering goods into city centres.”

However, none of the foregoing appears to be deterring manufacturers from investing in the UK or enhancing their dealer networks and model ranges.

Scania is building a new UK headquarters at its long-established head office site at Milton Keynes while investment is being pumped into its network. Plans are afoot for big new dealerships near Gatwick Airport and at Bridgwater in Somerset, not far from the Hinkley Point C nuclear power station now under construction.

At the same time, it is adding new 7.0-litre diesel and 13-litre dedicated gas engines to its line-up plus the new eight-passenger CrewCab. Also arriving are the low-entry L-series cab and the factory-fitted City Safe window which can be installed low down in a cab’s passenger side door.

Both introductions should help make it easier for the truck’s driver to spot vulnerable road users; a key aim of London mayor Sadiq Khan.

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