As it stands, nearly three years on from the EU referendum, we are none the wiser as to what the relationship between the UK and the EU will look like over the longer term. Every conceivable scenario is still a possibility. We could leave the EU with a deal in place; we could leave the EU with no-deal; or, if the 5.8 million people who have signed the petition to revoke Article 50 have their way, we could remain in the EU.
What all this means is that even the most well-connected political soothsayer, or even Theresa May herself, would struggle to predict exactly how Brexit will impact fleet businesses. However, we can still explore some of the potential challenges Brexit is likely to create for your fleet business over the coming months and years.
The costs of running a business fleet will rise
Unless we remain in the EU, which admittedly seems unlikely, the consensus of the majority of UK fleet managers is that the costs of running a fleet will rise. According to a poll by Fleet News, 64.1 percent of UK business owners expect that the decision to leave the EU will make it more expensive to run a fleet of cars. That’s regardless of whether we leave with or without a deal in place.
The Road Haulage Association has already warned that under a no-deal Brexit, imported HGVs will attract a 22 percent tariff that could strike a crippling blow to many UK hauliers. Those costs would extend to fleets of cars, vans and other commercial vehicles, with the government’s current no-deal Brexit plan bringing an end to preferential trade deals with our biggest markets. The result would be the imposition of tariffs that make imported vehicles more expensive and increase the costs of business fleets.
An unsettling of the UK’s used vehicle market
Brexit uncertainty, combined with the introduction of London’s Ultra Low Emissions Zone in April 2019, is already showing signs of unsettling the UK’s used vehicle market. Although demand and the general level of prices remain high, businesses are exercising more caution when making vehicle investment decisions.
Businesses are buying cheaper vans rather than taking out a loan or using their own reserves to buy a newer, more expensive van. They are favouring used vehicles in the £4,000-£8,000 bracket rather than the £10,000-£15,000 range. That trend has already affected the buying patterns of dealers, with higher-cost stock such as tippers and popular models such as VW Caddys and Ford Transit Customs in demand one week then proving difficult to move the next.
A potential labour shortage
Whether we leave the EU with or without a deal in place, there has already been government consultations on setting a minimum pay threshold of £30,000 a year for EU workers applying for UK work permits. The ongoing ‘Brexodus’ of EU workers who are already leaving the UK, as well as a fall in the number of workers who meet the pay criteria, could leave a critical labour shortage in a number of areas.
The likely result will be that UK fleet businesses not only find it more difficult to recruit foreign workers in the first instance, but they’ll also have to pay higher salaries to do so. That could lead to an increase in the cost of fleet maintenance, servicing and repairs. As well as increasing costs, a shortage of mechanics could cause delays that leave some small business vehicles off the road.
The cost and availability of vehicles and parts
These days, vehicles that require repairs are often reliant on high-tech genuine parts that are made by the manufacturer. Many of those parts have to be imported from mainland Europe, which is likely to lead to extra costs for fleet businesses once we have left the EU.
If we were to lose the right of free trade in the event of a no-deal Brexit, British companies will have to pay tariffs on imports which will increase the cost of parts and repairs. There’s also the impact of the shifting value of the pound. The pound has already lost value against the euro, which has pushed the price of parts and vehicles made by EU members up. That situation could get worse once we leave the EU.
Fuel is often cited as the most expensive element of fleet management, with fuel representing up to 60 percent of a fleet’s total operating costs. Fuel price fluctuations are just another area of uncertainty the Brexit process will bring. Immediately after the vote, the cost of fuel shot up as the pound fell 10 percent against the dollar, which made crude oil more expensive to import per barrel.
Since the referendum, the value of the pound has remained largely flat and the price of crude oil is stable. However, some currency experts are predicting a further fall in the value of sterling against the dollar once we leave the EU. If that prediction becomes true, fleet businesses can expect to feel the pinch at the pumps.
Boost your brand and protect your bottom line
Clearly, Brexit has the potential to cause major problems for UK fleet businesses. With uncertainty pervading, fleet managers are urged to mitigate the challenges they’re likely to face by focusing on the elements they can control. That includes your ability to maintain a clean, presentable and professional fleet.
At Dropless, we can help you keep your fleet in the very best shape while also boosting your brand. Find out more about how our waterless fleet cleaning service can send your eco-credentials soaring and get in touch with our team.