Aston Martin Could Be In Trouble If Brexit Pushes Through With No Trade Deal In Place With The European Union
Situation has been described as "semi-catastrophic"by Kirby, on
As much progress as Aston Martin has had in recent years of re-establishing itself as one of the best marquee brands in the world, everything it has built could come crumbling down by forces that are completely out of its control. Welcome, then, to the affairs of the present-day United Kingdom, where the looming Brexit move continues to hover over the whole country like a dark and foreboding cloud. Any and all British companies could be affected by it, and Aston Martin has made it clear that if the U.K. fails to strike a Brexit deal with the European Union, the British automaker would have to stop production of its cars in the U.K., effectively stalling its business until the issues are settled.
The doomsday scenario is a very real one for Aston Martin has no less than finance chief, Mark Wilson, described it as having a “semi-catastrophic effect” on the company. A big part of Aston’s concern focuses on having to recertify approvals with other regions so they can sell their cars in those markets. That includes Chinese approval in China, approval on a federal level in the U.S., or E.U. approval, should it come to the point that the company would need to apply for one. If it does come to that, Wilson admitted that it would mean that Aston would have to temporarily stop its production. The issue isn’t as big of a deal today since the U.K. is still technically part of the E.U. But if Brexit does happen without some kind of trade deal in place, the validity of all U.K.-made cars that are headed to E.U. will be in limbo. And if Aston Martin can’t move these units, it’s not going to make them in the first place, hence the potential of a cease in production. Clearly, the political uncertainty of Brexit comes at a horrendous time for Aston Martin has the automaker has just started to pick up momentum in its goal of reinventing itself as a prized automaker. This situation is still fluid, though, so anything can still happen but, if worst comes to worst, it might be prudent to start preparing for situations like this. And, I’m not just talking about Aston Martin; I’m talking about the U.K.’s entire trade infrastructure with the whole world getting thrown into chaos.
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Brexit is a real concern for a lot of automakers
A big part of Aston’s concern focuses on having to recertify approvals with other regions so they can sell their cars in those markets
This situation normally flies by heads because of all the political implications it has, but it’s actually a legitimate concern. Not just for Aston Martin, but for the entire auto industry. That was certainly the temperature in the air when Mark Wilson made his thoughts known about the issue. Even more worrisome is that Patrick Keating, Honda Europe’s government affairs manager, echoed similar concerns regarding the tumultuous nature of the Brexit deal.
According to Keating, Honda imported two million components every day to from Europe on 350 trucks and had just one hour of stock on its shelves. Though he admitted that the figures he’s throwing out aren’t scientific, he did say that every 15 minutes of delay at customs would cost the automaker a staggering £850,000 (close to $1 million) a year. To make things more complicated, securing approvals in other markets and getting new systems ready for new customs procedures will take time to sort out. Keating hinted that in Honda’s case, these new procedures could take as long as 18 months.
Right now, all new vehicles in the U.K. that are required to have Vehicle Certification Agency (VCA) approval are still valid in the E.U.
The scenarios being thrown out by Aston Martin and Honda may sound apocalyptic now, but that’s only because it hasn’t happened yet. Right now, all new vehicles in the U.K. that are required to have Vehicle Certification Agency (VCA) approval are still valid in the E.U. But, what happens if a deal between the U.K. and the E.U. can’t be reached? Well, according to the BBC, the validly of these cars will end from March 2019. What happens next? Clearly, there’s still a long way to before questions of that kind can be answered. But let it be said that Brexit is a real problem for the auto industry and, if things negotiations between the U.K. and the E.U. go from bad to worse, a lot of problems will bubble come the surface that could potentially affect the entire industry, both in the short and long term.
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