Correct. And because of that the needs and priorities of 26 might be affected by a decision of 1. Sounds like tyranny to me, especially when an FTA is closer to the status quo for the 27's economies and refusing a deal creates a fundamental change for them.
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EU Referendum: The result and aftermath...
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Correct. And because of that the needs and priorities of 26 might be affected by a decision of 1. Sounds like tyranny to me, especially when an FTA is closer to the status quo for the 27's economies and refusing a deal creates a fundamental change for them.
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EM2
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Not if you know that at the outset.
furnessvale
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Does anyone seriously believe that, in 23 months time if a deal is in the offing, Germany will continue to bankroll the EU without question, when the objections of a Wallonia or similar are threatening to halt exports of BMWs, Mercs, Audis and VWs to the UK?
What I would expect in that case is that Germany would ask Wallonia "What do you need to make this deal palatable to you?"
Yup, because not halting those sales to the other 26 states will be more important than to one country who thought they were better than the rest.
Germany, if they play their cards right, stand far more to gain from our departure than they lose by not being able to send a few cars our way without incurring trade fees. Besides, we're desperate to keep a free trade agreement for car manufacturing anyway, just to keep the plants we have in the UK already from moving to the likes of Germany and France. Who know's what we'll offer for the chance of that deal?
HSTEd
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Yes, because people will still want to buy BMWs, Mercs, Audis and VWs.
So people will pay any tarrifs that are imposed.
At the same time these exports represent a small fraction of total German car sales - so its entirely negligible even if that trade did stop.
The damage to the EU will be proportionally far less than the damage to the UK.
Exports won't halt altogether, although European imports will reduce in competitiveness versus those from Nissan, Honda, Toyota, Vauxhall, MINI, Land Rover, etc, so you could expect those marques to increase their market share. That will change behaviour so it's not just a case of paying tariffs: it's selling fewer cars. We buy about 1 in 5 of German exported vehicles and it's one of their major export industries, so certainly not negligible.
But nowhere near 1 in 5 vehicles produced by German car manufacturers.
I'm surprised it's as low as 1 in 5 considering VW alone account for Skoda, Seat, VW and Audi, plus the upmarket brands that aspirational Brits favour.
No, that's more like 1 in 7.
Are you just being argumentative or are you trying to suggest that circa £15bn of exports every year is negligible?
I'm pointing out that German car manufacturers sell many more vehicles in Europe, the USA and China than they do to the UK. They'll be just fine even if they never sell another vehicle in the UK market.
If by "just fine" you mean that Germany wouldn't slide into a new great depression, that's correct.
If you think it wouldn't have a material effect on VW Group's sales and profits, workforce and factory utilisation such that it and its shareholders would be pushing for a deal, that's almost certainly incorrect.
NSEFAN
Established Member
That's hardly a positive thing if the only reason is that importing is even more expensive that buying British because of import/export taxes. Will more Brits just have to accept that some things they take for granted now will become expensive luxuries if a decent trade deal isn't met?
Tetchytyke
Veteran Member
86% of cars bought in the UK are imported.
Once again, Leave supporters seem to be falling into the trap of thinking that this strengthens our bargaining position, whereas in reality it really really doesn't.
"I buy all my food from Tesco therefore I am essential to Tesco's business". Nope. It doesn't work like that.
Import tariffs for high end cars in China can be as high as 25%. It doesn't stop people buying them. It just makes them more expensive.
It would have an effect, and naturally they would prefer to have a deal that allows things to continue as is, but using the 2014 company report, the UK accounted for 454,400 sales out of 3,715,298 passenger vehicles sold in Europe (12%) and 8,957,975 worldwide (5%).
The VW group could survive a 5% drop in sales.
In that year 820,000 cars were exported from Germany to the UK (source).
You're the one talking about 'survival'. I've never said that German car manufacture wouldn't survive. I just reject the notion that German-British car trade is 'negligible'.
So many cars are purchased from abroad partly because (aside from marginal transportation costs) there is no cost penalty in doing so.
If tariffs in future start to apply to some cars but not others, there would be a price differential that would (in my view) change consumer behaviour. The British-made Honda Civic would probably gain a relative advantage over the German-made Volkswagen Golf for example. People will only swallow significant price increases (and you're right, automotive tariffs are large) if there is no other option or if the quality of the more expensive cars really is worth the price differential.
This is how protectionist tariffs are supposed to work but they effectively operate as an unwanted tax payable ultimately by consumers to the state. It's a little like a rise in VAT (although perhaps we could selectively cut VAT using tariff income to help to offset the impact on consumers).
On your figures we import about 2.3m cars each year (86% of this). Our total global car exports are 1.25m. So there is more British demand for European-made cars than there is European demand for British-made cars. If the absolute worst came to the worst, and shipping cars across the channel became uneconomic, it would make sense for the British car industry to serve domestic consumption and for European marques to open factories here if they wish to compete without tariffs. I don't advocate that though.
Tetchytyke
Veteran Member
You're looking at it the wrong way around.
86% of the new cars on British roads are imported, mostly from the EU. At the same time, from some factories 80% of the cars made in the UK are exported, mostly to the EU. We might import 850,000 German cars, but we export 1,250,000 cars to the EU.
This leaves us in a particularly tricky position, as losing access to the common market will simultaneously destroy our manufacturing and cause massive inflation.
The simple fact of the matter is that we need access to the Common Market a lot more than the Common Market needs access to us.
ETA: I think there's enough mutual dependency for both the UK and the EU to come to a sensible compromise...just so long as the Faragistas don't start waving their willies around like it's the 1850s again. If we start trying to throw our weight around, acting like we're as indispensable as in the days of Empire, then the EU will very quickly point out that we're not. And rightly so, to be fair.
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But our total imports are much more than 850,000 - that's just Germany. We have the domestic demand to support a thriving car manufacturing sector if we ever did become cut off, although I would prefer no tariffs and no protectionism.
Correct - that's exactly my view. And David Davis is neither a Faragista nor a willy-waver.
But don't forget the other key part of Arctic Troll's post:
Arctic Troll's post (if indeed he needs you and me to dissect it for him) suggested that, regardless of his views on the balance of dependency, there is enough mutual dependency to do a deal. I agree with him on that.
Geezertronic
Established Member
In my opinion the new car market was already going to suffer as a result of the higher rates of car tax which have nothing to do with Brexit but could skew the new car sales figures from now
Their car manufacturers would like a deal, ours need a deal.
Tetchytyke
Veteran Member
Pretty much spot on.
If we go into negotiations thinking we can throw our weight around, that we're indispensable, we'll have a rude surprise. I understand why the rhetoric from Government is bullish, but I hope they're more sensible when it really starts. I just fear that they won't be.
I think we already see how vulnerable our car manufacturing is, with the sweeteners handed out to Nissan. And now Peugeot own Vauxhall, the sweetners are going to have to get bigger.
Ahh, get the excuses in early.
Average new car price in 2012 was between £18k[1] and £26k[2]. Average age of a car is 7 years, so assume cars get scrapped at 14 years. Cost of 14 years of VED is now £140*14 = £1960. [3]. Average Insurance in 2015 was £625, or £9k over 14 years [4]. Add 11 years MOT and basic servicing at saying £100 a year.
So even ignoring the cost of running, major servicing, tyres, parts, etc, you're spending £20k+£2k+9k+1K = £32k over 14 years.
Had VED been £30 a year instead of £140, that number would have dropped to £30k - about 5% difference in cost, before the above
[1] https://www.statista.com/statistics/299855/market-value-of-new-and-used-cars-in-the-united-kingdom/ and https://www.smmt.co.uk/2015/01/uk-new-car-registrations-december-2014/
[2] http://www.motortrader.com/motor-tr...news/average-car-price-rises-28973-08-08-2012
[3] http://www.autoexpress.co.uk/car-news/consumer-news/88369/car-tax-bands-what-you-need-to-know
[4] http://www.autoexpress.co.uk/car-ne...-of-uk-car-insurance-jumps-over-100-in-a-year
Howardh
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I noticed that, and the late rush to buy pre-tax cars (like myself); but if inflation kicks in it will be hard for many to find the cash for a new car way after the tax "rise" has been forgotten. And we don't know what tariffs may be added to the cost of foreign cars. Will that boost the home car manufacturing market? Dunno - how much of a "British" car is imported? And how many would buy a British car over a Korean or Japanese car - even if cheaper?
Howardh
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I did the sums buying mine.
£8250 66 reg 9 miles.
Road tax £20/yr
Insurance (currently) £240/yr
Miles 8000/yr @ £0.11/mile £880/yr
Service (first two yrs) £200 appx
Service and MOT after two £250 appx
So not including tyres and other stuff, if there's no major breakdown/failure for the next 7 years it's £1400/yr.
Thinking a taxi return to town is £8, I could have 175 return taxi trips for that!!
Brexit means wholesale changes, not everything staying the same. That's the whole point, people hoping for more of the same are going to be disappointed.
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