View from the U.K.

Brexit is still happening—and the little guys are carrying the burden

by John Mayhead
12 May 2022 6 min read
Image
. Photo by Getty

“To be honest, I don’t see Europe as being inaccessible…most of the Brexit challenges have been resolved.”  Tom Wood, CEO of classified and timed auction juggernauts Car and Classic should know: His company trades across Europe with around 15 percent of sales (and growing) taking place in the EU.

Car transport specialist Paul Blakey has experienced things a bit differently. “I don’t quote for European business anymore. The costs just aren’t viable for me as a single operator.”

Much of the punditry regarding Brexit focused on the notion of there being two Britains—the wealthy, urban set in London that heavily benefited from European integration and the poorer, post-industrial citizenry that blamed the EU for many of their woes. The reality, at least in the classic car industry, presents a mirror image of that narrative, wherein large operations have adapted with relative ease, but the little guys are still sorting through the paperwork.

If you’re reading this outside the U.K., you’d be forgiven for having forgotten all about Brexit. Even when I wrote about its immediate impact early in 2021, the COVID-19 pandemic was dominating headlines. A year on, Europe and the rest of the world is more concerned with Russia’s invasion of Ukraine.

Yet for day-to-day business in the U.K., Brexit is still having an impact and forcing businesses to change the way they operate. Big international car transport companies, auction houses and event organizers operating between the U.K. and EU are now used to dealing with the paperwork (called ATA Carnet) that gives them permission to temporarily import cars and have banking facilities in hand to cover the deposit bond that can run in to tens of thousands of pounds. Big dealers have hired staff to deal with the additional paperwork and are used to adding 20 percent VAT to any imported car under 30 years old. Parts retailers, too, have changed their business models.

“What we’ve realized in the last few years is that we have to rely on ourselves… today almost nothing is made outside the U.K.,” said Mark Burnett, MD of Burlen Limited, the classic fuel systems specialists who are custodians of SU, Zenith and AMAL carburetors. “The cost of making parts abroad used to be the reason companies went there, but [today] it’s not cheaper.”

That said, Burnett told me that the catalyst for bringing manufacturing in-house started well before Brexit and was prompted by demographic challenges. “For us, business is all about people,” he said. “We trade in relatively small numbers of high-quality parts and in the past there were quite a lot of “Fred in his shed” manufacturers making them for us. But what happens when Fred wants to retire? We have to make the parts ourselves.” For Burlen, the investment in 3D printing machines, CNC machines and, critically, training of younger specialists was well underway by the time Brexit and COVID hit.

“What we’ve realized in the last few years is that we have to rely on ourselves… today almost nothing is made outside the U.K.”

Mark Burnett, managing director, Burlen Limited

Other major parts retailers pre-empted Brexit challenges in different ways. “We already had a presence in Europe but have had to invest in building bigger storage and distribution hubs in both France and Holland,” said Julian Barratt of British classic car parts supplier SNG Barratt whose export sales are around 80 percent of their total. “Before January 2021 [when the post-Brexit regulations came into force] we massively filled up our stocks in those warehouses. We are used to shipping internationally, so we already knew the weights and dimensions [of our stock] but even so the start of last year caught us out. Our paperwork was good, but if the paperwork for someone else’s pallet on the same truck was wrong, then the whole lot was impounded. We had some shipments taking 8-12 weeks. Our EU customers weren’t very understanding, seeing Brexit as something we [the U.K.] have imposed on ourselves.” SNG Barratt now employs staff at their European sites and has developed a different area of their website specifically for EU customers, with the money they spend going into an EU- based subsidiary.

“With the custom charges added [the cost] is probably more than what the parts themselves cost.” 

Kelly Wright, AH Spares

But some companies, especially those smaller than SNG Barratt, needed to start from scratch. “No one in the business had experience [of exporting] so we had to learn whilst going through it which added costs,” said Kelly Wright of Austin-Healey and Sprite parts specialist AH Spares. “All countries have different fees and demands so it’s a constant learning curve. All [of our stock items] now must have accurate commodity codes which again took staff a lot of time and we have to input these into the courier’s database for every shipment. With the custom charges added [the cost] is probably more than what the parts themselves cost.” 

There are other complexities that only became apparent once the U.K. had left the EU. “There were some U.K.-based suppliers we had been buying from for years,” said Julian Barratt. “But post-Brexit we found that the country of origin of these parts was abroad. Now each of these is subject to a different duty tariff if we export them to the EU. This often means that the EU customer won’t know exactly how much duty they will have to pay until it arrives. That’s a massive barrier to retail – many just wouldn’t bother and would buy from somewhere else.”

“If someone has a road-registered car, I just recommend they drive it over on the Eurotunnel!”

Paul Blakey, Car transport specialist

The delay in customs processing and increased costs have affected other areas of the industry. “The paperwork is one thing—export documentation and carnets start at about £500 [about $600] and can be much more,” said Blakey, the car transport specialist. “But the big problem is the customs delay, which is unpredictable. One day the paperwork seems to be OK but the next it can lead to a long delay as everything gets checked. To make sure I’m at the destination on a dedicated day [for instance at the start of an event] I have to leave at least a couple of days earlier than I would have done before. That all adds to the cost. Then there’s the time taken to get the paperwork stamped—before you leave the U.K., at the port of arrival, in the country of origin and then making sure you get a formal receipt that is acceptable to customs. If someone has a road-registered car, I just recommend they drive it over on the Eurotunnel!”

Events are another area that have been hit hard. There used to be a thriving network of static car shows throughout Europe and the U.K. that attracted small traders from all across the area. Brexit regulations make this an almost impossible activity, as Kelly Wright explained. “The carnet had to have a list of everything on the van including weight, quantities, cost price etc. [This included] our giveaways such as brochures and business cards… we had to pay a duty on them and get refunded for what we didn’t give out and brought back home.”

It is no wonder that AH Spares’ experience meant that they were one of only a handful of companies I could find who travelled from the UK to this year’s Techno Classica show in Essen, an event that used to have a strong British presence. It works the other way, too: The chances of an EU trader itemizing, weighing and pricing a vanload of parts to bring across to a U.K. swap event is very low. The staff at the Beaulieu chose not to comment on their expectations until after the Spring Autojumble, but a much-reduced field is expected at that show.

It is clear that the effects of COVID 19 did have an effect on the classic and collector car industry across Europe and the U.K., but most of the enduring problems are the result of Brexit and the new regulatory framework that was created by U.K.’s divorce from the EU. Bigger companies have invested in staff, facilities and processes to deal with this, but it is the smaller traders who have really suffered. Fundamentally, it’s the classic vehicle owners who have been most affected: those increased costs have to be added to retail prices, and the reduction in UK/EU trade has meant that some parts are much harder to source.

So, how do we deal with these challenges? One way is for the industry to lobby for changes to legislation. The Historic & Classic Vehicles Alliance (HCVA)—of which Hagerty is a founding partner— engages on behalf of British companies, said CEO Garry Wilson. “The U.K. is one of the global leaders, with the skills and crafts to repair and restore classics vehicles. A reduction in the number of cars and parts crossing the English Channel impacts shows, events and racing series and the effect is reciprocal. This impacts the less well-off owners and enthusiasts most as they will often do the transportation and documentation themselves. The HCVA has a large agenda of actions to try to improve this situation. We have been in contact with the Department for International Trade and this remains a high priority for action.”

Others have taken a more pragmatic approach. “We’ve offered some of our more well-established small, U.K.-based parts suppliers the chance to hold their stock in our European warehouses,” Julian Barratt told me, with SNG Barratt effectively drop-shipping the items for them. It’s a great idea; cooperative groups of traders supporting each other may be the future, and possibly the current situation could encourage a rise in U.K.-based parts manufacturing, but I can’t help feeling that the process of keeping my classic car on the road has just become more difficult and expensive, with my freedom to use it in Europe reduced.

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Comments

  • OldFordMan says:

    Their leaders should be totally ashamed that they ever conceded their borders to a “European Order” (EU) to begin with! Hitler tried to gather all those countries under his dictatorship; Stalin actually did then it all fell apart.
    As for UK, they had it all figured out before they “joined” EU so what’s the bfd about going back to those ways?

  • RONALD D SIEBER says:

    This is what happens when politics get mixed in with business. As we have seen with sports, the result is madness. Let’s hope that the HCVA makes some headway into this stormy sea, as many fat-cat politicos will get angry without their cut.

  • Chris says:

    Decentralization or localization of machining/sourcing seems one positive possible outcome, along with new kinds of courier services perhaps. The restoration industry is not the only one facing major obstacles due to global political ambitions which generally have to do with totalitarianish demands for details/data in order to know better how to tax, “regulate” and generally where/why goods are moving. Old Mark Twain’s quote about politicians holds true. If it’s possible to reduce guv and create healthy boundaries between jurisdictions of legislation and business, should people like to know or request it? Public private partnerships are all the rage in the age of technocracy – guv and biz are awfully intertwined and it is possible that guv doesn’t answer to the taxed so much as certain corporations which like to see global markets managed online – thus the stultifying data (power) grabs. Is compliance best? It’s too bad that HCVA is needed, and maybe a Good Reset on lots more, not just automotive, Brexit is a drop in the bucket to how a global health dictatorship could impact all automotive with its May 22 IHR vote. 194 countries would supposedly be agreeing to be represented by a single vote, (by an unelected person in US!), ENABLING the WHO to both DEFINE and DECLARE emergencies globally, which could result in a bit more inconvenience and drain than having to inventory wares. As I recall, 2020 measures had a rather large impact across the board.

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