Honda would like to see the UK remaining inside the customs union.


UK automotive manufacturers want to avoid post-Brexit UK-EU trade arrangements that could impose additional costs

Honda has strongly backed the case for the UK remaining inside the EU’s customs union after it leaves the EU in 2019. The UK government has previously said that the UK will leave the EU’s single market and the EU customs union as part of the plans to leave the EU.

Speaking at the SMMT’s International Summit in London, Ian Howells (Senior Vice President, Honda Motor Europe) warned that a business environment that supports and encourages free and frictionless trade is necessary to enable companies like Honda to seize business opportunities, ‘particularly in the light of the UK’s departure from the EU’. “To us, free and frictionless trade implies the elimination of tariff and non-tariff barriers, for the smooth flow of goods along supply chains and simple, painless customs arrangements,” he said. “All of which the European Union’s customs union currently provides.”

He said that the more Honda digs into the detail of what leaving the EU’s customs union after Brexit would mean, the ‘more complexity we discover’. Howells warned that that leaving the EU would “create additional cost to our business as well as create complex technical and regulatory challenges for civil servants and businesses alike”. Howells said that continued membership of the EU customs union could provide significant benefits for the ongoing success of the UK’s automotive sector.

“By remaining inside we avoid customs tariffs,” he said. “Tariffs would erode the competitiveness of OEMs as well as companies throughout the supply chain. Not having tariffs enables UK operations to compete fairly with EU-based carmakers. Under WTO rules that would apply if we left the customs union without an EU-UK free trade agreement, cars would attract a 10% tariff and parts would face 4.5% tariffs. High tariffs would reduce the competitiveness of UK exports to the EU while the [reciprocal] imposition of tariffs on parts imported from the EU would drive up the costs for manufacturing in the UK, regardless of where in the world the products are sold.”

Howells also pointed out that being in the customs union avoids the complexity of applying ‘rules of origin’. “All free trade agreements use these rules to determine which goods can benefit from reduced duties and other preferential treatment,” he said. “These rules usually state that a product must contain 50-60% of originated content to benefit from reduced tariffs. The reality is that only 40% or so of the components used to build a modern car can be sourced in the UK and not all of that would be customs originating as local suppliers often source from abroad. “The upshot of that would be not being able to meet rules of origin thresholds and the UK automotive sector would therefore not stand to gain from trade deals with the EU or rest of the world without significant divergence from current practice.

“Staying in the EU customs union avoids costly and complex compliance on goods traded with the EU.
“Further, by pooling UK and EU content, we would also continue to benefit on preferential treatments from EU free trade deals with third countries. Simple EEA membership [European Economic Area – a free trade zone that includes EFTA countries] or a free trade deal would not be sufficient. Compliance with rules of origin currently imposes heavy costs on Norway and other EEA members not in the EU customs union.”

Howells also stressed the importance of maintaining pan-European supply chains for automotive manufacturing in Britain, with a high proportion of components coming from European factories. “As we operate a highly efficient just-in-time manufacturing process, we rely on goods being able to move smoothly across the EU-UK border, arriving at the factory at the right time. Production at Swindon relies on the timely delivery of two million components daily; some 350 truckloads a day are EU-sourced parts. We hold components for one hours’ worth of production line-side, and hold just half a day’s worth of EU and UK sourced components in local warehouses. Given this finely balanced system, any disruption to the flow of goods to the factory could interrupt our ability to continue to produce cars efficiently at Swindon. By remaining in the customs union, we avoid these risks.”

Howells also pointed out that additional border checks on goods would mean more spending on infrastructure and staff for new customs checks at EU-UK borders. In addition, he said new customs procedures would create new administrative and IT burdens for UK companies.
All member states of the EU are inside the trade bloc’s customs union (and the EU single market, which covers services and free movement of people, as well as physical goods), but membership of the customs union is also available to non-EU members. Turkey, for example, is not in the EU but is inside the EU’s customs area following a customs agreement signed in the mid-1990s. 

On the plus side, Turkey has benefited from much automotive inward investment – OEMs and suppliers attracted to its low costs and easy, tariff-free shipments to the EU. However, critics point out that Turkey has been impeded from cutting trade deals with non-EU countries and is forced to accept EU free trade deals with third countries, some of which can potentially disadvantage Turkey’s domestic economy. Staying inside the EU’s customs area following EU exit would likely be politically controversial in the UK.

Christopher Macgowan

@chrismacgowan

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Lotus 59 – immaculate.

Totally original as the day it was built this Lotus 59 was driven by Emerson Fittipaldi.

Christopher Macgowan 

@chrismacgowan

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Call by SMMT for new UK Government to focus on strengthening automotive sector.


The SMMT has renewed calls for more focus on the automotive market from the British Government following the general election on 8 June. Despite an increase in sales and manufacturing in the UK during 2016, the sector faces change due to both technological advances and Brexit.

UK car manufacturing fell in April, according to figures released today by SMMT. 122,116 cars were made in the month, an 18.2% decrease on April 2016, as the late Easter bank holiday affected production.

Despite a decline in April 2017, vehicle manufacturing remains strong in the UK, with 593,796 cars made so far this year – a 1% increase on the same period in 2016. These figures are the level for the first four months of the year since 2000.

Demand from overseas buyers continues to drive growth, up 3.5% so far this year and offsetting a fall in UK sales of 7%. In total 76.8% of all cars made in the UK since January have been shipped abroad, with the majority going into the EU.

However, the SMMT feels that this could be under threat with changes in both technological and political landscapes. It has launched a report highlighting what needs to be done in the next five years to ensure the automotive market in the UK remains strong. With the country home to six mainstream vehicle manufacturers, nine premium and sports car manufacturers, six design centres, nine engine manufacturers and over 2,500 suppliers, the report calls on any new government to build a strong trading relationship with the EU post-Brexit, which safeguards the interests of the automotive industry.

To emphasise the need to free trade, SMMT CEO Mike Hawes comments: ‘We need to make sure we have no tariffs, no barriers, and no additional customs checks, all of which will add cost to the industry. If we were to revert to WTO there would be a significant cost attributed, around £1.8 billion (€2.1 billion) on exports, and £2.7 billion (€3.1 billion) on imports. That would translate to an increase in sticker price on a vehicle of around £1,500 (€1,700). When you consider that 80% of cars sold in the UK are imported, and therefore subject to the increase, it is easy to see who would bear the burden – the consumer.’

The report also calls for the new government to ensure a globally competitive business environment by taking an ambitious and joined-up approach to tackling issues that affect UK competitiveness, create a long-term industrial strategy, support sustainable and ultra-low emission vehicles (ULEVs) through funding and infrastructure, and to develop a comprehensive connected and autonomous vehicle strategy, removing obstacles to their development and deployment.

Hawes adds: ‘Overall, British car manufacturing remains in good health with the production outlook still very positive and significant new models due to go into UK production shortly. To guarantee future growth and investment into our industry and its vital supply chain, however, we need the next government to safeguard the conditions that have made us globally competitive, keeping us open and trading and delivering an ambitious industrial strategy for our sector.’

 

SOURCE AUTOVISTA

Christopher Macgowan

@chrismacgowan

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Ferrari at Goodwood.


An absolute highlight of this summer’s Goodwood Festival of Speed presented by Mastercard will be a glittering array of at least 70 significant Ferraris, as the legendary Maranello marque celebrates the 70th anniversary of its founding by il commendatore, Enzo Ferrari, in 1947.

From Thursday June 29th to Sunday July 2nd, a jaw-dropping variety of Ferrari’s finest road and racing cars will be found at the Festival, including competition sports cars and single seaters, incredible road cars, and the very latest supercars. For lovers of the iconic Italian brand, it will be a truly once in a lifetime experience.

From Ferrari’s long, continuous and hugely successful history in motorsport, a number of the most celebrated of Maranello’s racers will be in action up Goodwood’s famous 1.16-mile hill. Among these will be around 25 iconic single-seater Ferraris, covering each of the key post-war Grand Prix eras, powered by four, six, eight and 12-cylinder engines, with normal aspiration, superchargers and turbos.

Sports cars in action will chart Ferrari’s landmark successes in all the great endurance races, from the late 1940s right through to the present day. A mouth-watering line-up of current production cars will grace the Michelin Supercar Paddock, as well as running on the hill. On a calmer note, one of the classes in the popular Cartier ‘Style et Luxe’ concours d’elegance will be dedicated to Ferrari’s legendary 250 models – named after the 3-litre V12 which propelled the Scuderia to countless victories on-track, as well as powering some of its most iconic road cars.

Christopher Macgowan

@chrismacgowan

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ASTON MARTIN’S TIMELINE CELEBRATES PERFORMANCE CARS AT BEAULIEU – SUNDAY 2ND APRIL


 
Beaulieu will put on show a real-life timeline of historic Aston Martin DB models to celebrate legendary British performance cars at Simply Aston Martin on Sunday 2nd April.

 

To view the full release and related files, please click HERE

 

If you cannot use the link above, copy and paste the address below into your web browser’s address bar:

http://www.newspress.co.uk/public/ViewPressRelease.aspx?pr=70670&pr_ref=34757

 

BEAULIEU LINK

Christopher Macgowan

@chrismacgowan
 

 

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FORD IS NAMED ONE OF THE WORLD’S MOST ETHICAL COMPANIES FOR EIGHTH YEAR IN A ROW


Ford is shrinking its environmental footprint by sharing even more leading sustainability practices with its suppliers around the globe.

PACE, which originally focused on water and energy conservation, has now grown to offer best practices for reducing waste, carbon dioxide and air emissions; carbon emissions could be reduced by nearly 500,000 metric tons globally in the next five years.
Ethisphere Institute today named Ford in its list of the World’s Most Ethical Companies for the eighth year in a row, recognising its ongoing commitment to environmental sustainability.

Ford is reducing the environmental footprint of its supply chain with an enhanced Partnership for A Cleaner Environment (PACE) program that has grown to more than 40 suppliers in 40 countries

The Partnership for A Cleaner Environment (PACE) is part of Ford’s commitment to creating a better world. While many sustainability practices have already been implemented at the company’s manufacturing sites, Ford has expanded the program to include tools to help suppliers reduce carbon-dioxide emissions and waste, and to help make water and energy consumption more efficient.

Last year, a second select group of suppliers were invited to join the voluntary program, bringing the number of participating companies to more than 40 in two years. PACE now has the potential to impact nearly 1,100 supplier sites in more than 40 countries.

“As a company, it’s important that we make quality products and minimise the impact on the environment by doing things the right way,” said Mary Wroten, senior manager of Ford Supply Chain Sustainability. “Having suppliers that want to share that responsibility shows we can work together to reduce our collective environmental footprint, while still continuing to deliver great products.”

As part of PACE, Ford offers best practices and monitoring tools to help its suppliers track and achieve their own sustainability goals. In return, the suppliers report their environmental progress and share their own best practices. Already, participating suppliers are on track to save an estimated 550 million gallons of water over the next five years – enough to fill 837 Olympic size swimming pools– according to data collected in 2016.

However, the fight for sustainability isn’t just about water. Thanks to the current suppliers participating in PACE, carbon emissions could be reduced by nearly 500,000 metric tons worldwide during the next five years. That’s equivalent to eliminating the carbon emissions of over 50,000 homes a year.

Ford is providing suppliers with a PACE toolkit, complete with more than 350 leading practices across four categories: energy, water, air emissions and waste.

Leading practices include optimising cooling tower operation, reducing compressed air usage in manufacturing operations and eliminating single-pass cooling systems. In addition to larger scale projects, even the simplest leading practices, such as replacing incandescent lightbulbs with LED bulbs, also will help conserve valuable resources.

Also among Ford’s leading practices are Energy Treasure Hunts, which allow suppliers to use experts in their own facilities to identify additional opportunities to save resources. Suppliers are encouraged to share their findings with their own supply chain and Ford.

Operating in 38 countries alone, Ford supplier DENSO has been participating in PACE since the program began in 2014.

“We are serious about protecting lives and preserving the planet, and sharing best practices with Ford helps further that mission to sustain the environment globally,” said Jim Laney, DENSO senior manager of Safety, Health and Environment in North America.

So far, DENSO has set targets for carbon-dioxide reductions in its manufacturing processes. The global supplier also focuses on cutting back electricity and water use with highly efficient equipment. This has meant installing closed circuit cooling systems and replacing metal halide lights with LED lighting.

PACE is just one portion of Ford’s supply chain sustainability strategy, which also includes initiatives on human rights, working conditions and conflict minerals.

Ford is also the first automaker to join the Electronic Industry Citizenship Coalition – a non-profit organisation dedicated to improving social, environmental and ethical conditions in their members’ global supply chains.

Christopher Macgowan

@chrismacgowan

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BCA – steady demand and richer mix as values rise in February.

Despite volumes remaining high, values climbed again in February with the headline average value reaching a record figure. Year-on-year, average values rose by more than 11% as BCA offered a richer mix of stock with a lower age and mileage profile.

 

Buyers continued to compete strongly for stock across the board with well-presented vehicles in ready-to-retail condition being strongly sought after. Average values for fleet and lease stock rose to the second highest point on record, while price performance for dealer part-exchange vehicles remained at near record levels.  

 

February recorded the highest headline figure since Pulse began reporting in 2005, with values rising by £203 (2.3%) to £8,822. Year-on-year values were up by 11.2% (£893), with average age and mileage falling by five months and 4,500 miles respectively.  

 

 Simon Henstock, BCA Chief Operating Officer UK Remarketing commented “BCA reports strong levels of demand in February, with plenty of interest in retail ready cars. February was a good trading month, however, the increase in the average selling price is only partially driven by the market. The richer mix of product offered by BCA, along with the lower average age and mileage profile is also impacting positively on values.”

 

 He added “Buyers still have a lot more choice and vehicles requiring repair and refurbishment need to be sensibly valued to compete. There is a noticeable and appreciable improvement in sales performance when vehicles are presented in ‘ready to retail’ condition, for the professional buyer to take away and sell without delay. For cars with cosmetic damage, SMART repairs are a cost effective option for sellers, meaning their vehicles can be quickly processed and presented in the best possible condition.”

 

“The market is anticipating increased part-exchange business and greater volumes from fleet and contract hire sources over the coming weeks. With Easter imminent – often a watershed in demand – this could impact on residual values in the weeks ahead and BCA is recommending that volume vendors appraise their sale stock closely to ensure it is valued in line with market expectations.”

Christopher Macgowan

@chrismacgowan

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