Posted by Mary Tinsley on Mon, Jun 19, 2017 @ 09:21 am

The 5 likely effects of Brexit on the fleet industry

5 likely effects of Brexit on the fleet industry

Now that the UK has given the EU notice of its intention to quit, nothing short of a miracle is going to prevent Brexit happening by the end of March 2019.

Yet, because we are only at the beginning of the process of disentangling our relationship with the European Union, almost every industry is facing uncertainty for the future. This is certainly true in the transport sector, where fleet managers are keeping one eye out for future changes to legislation covering emissions regulations, safety, driver training and licensing and – of course – new trading tariffs.

Although it’s early days, and current legislation will continue to apply until Brexit has taken place, there are five key areas that fleet managers would be well advised to monitor. Let’s take a look at what they are.

  1. Emissions legislation

In theory, Britain could pass new emissions legislation post-Brexit that would supersede the current Euro 6 regulations (or Euro VI rules for HGVs). At the moment, manufacturers have to comply with these tough emissions standards or their new vehicles cannot be sold within the European Union.

That said, it is highly unlikely that Britain will opt for laxer standards post Brexit. Britain’s own unilateral Climate Change Act imposes even tougher requirements than the EU for cutting carbon emissions – a reduction of 80% of 1990 levels by 2050. Abolishing Euro 6 rules would make reaching this target much more difficult.

It’s likely, therefore, that emissions legislation post Brexit will be as tough – if not tougher – than it is within the EU.

  1. Health & safety compliance

Even within the European Union, the UK has led the way in Health & Safety legislation. The 1974 Health and Safety at Work Act is considered to be the exemplar and has achieved so much to reduce work-related accidents and illness.

We believe that, not only will there be no appetite to opt for laxer H&S legislation post Brexit, but that the UK will continue to adhere to EU standards as a very minimum. Britain will still want to trade with EU member states, and to do so it makes us more competitive if we are able to comply to EU Health & Safety standards. Wise fleet managers will therefore keep H&S as a top priority.

  1. Driver recruitment, training and licensing

These issues are essential to fleet management, and it is much harder to predict what will happen post Brexit. With the free movement of people likely to be a sticking point in Brexit negotiations, fleet managers need to plan for the likelihood of not being able to recruit workers from mainland Europe – although EU workers currently in the UK are likely (though not certain) to be available after we have left the European Union.

Driver CPC on the other hand is unlikely to change, largely because the UK is a signatory to AETR (Agreement Concerning the Work of Crews of Vehicles Engaged in International Road Transport). This essentially means that, if we want to trade with the EU, we will need to comply with CPC standards that are the same as the EU’s. Furthermore, the upcoming EU shake up to driving training, which will ensure CPC contains one module each on road safety and another on fuel efficiency, is likely to be implemented before we leave the EU – so ongoing compliance with European legislation in this area seems the most likely outcome for fleets.

It is harder to guess what the driver licensing regime will look like post Brexit, but we expect that in order to trade with EU member states it will effectively remain the same.

  1. Uncertainty of contracts

We have found an increasing number of fleet managers – particularly in sectors like construction – are uncertain about future contracts. Indeed, many more contracts are now short term, used because the market wants to see how the economy and Brexit develop. The uncertainty this has brought to many sectors means that fewer fleet managers are willing to purchase vehicles they can’t be certain they will need in upcoming years. To solve this problem, a growing number are turning to flexible vehicle hire, which allows them to grow or shrink their fleet as contracts demand, as well as to source vehicles equipped with telematics and modern safety features (often a contract requirement).

  1. Tariffs

This is the hardest part of the Brexit equation to predict. We simply don’t know what tariffs will be imposed on trade with EU members states. However, if tariffs are imposed on imports, then the cost of acquiring new vehicles is likely to soar, while the increased cost of imported parts will push up maintenance budgets. Depending on which sector you work in, you may find that the cost of importing and exporting your products will grow – and because sterling is likely to fall, this will push prices of vehicles and fuel up further.

The impact on your fleet will depend on the outcome of negotiations, but it is certainly wise to take action to cut costs now – and again, flexible leasing may be a safer option than buying vehicles given the uncertain climate.

Conclusion – start planning now

In the light of Brexit’s uncertainties, fleet managers need to take an agile approach. We are finding that more and more firms are turning to flexible and short term vehicle hire , as Danny Glynn, vice-president and general manager of Enterprise Flex-E-Rent explains:  

“When there’s an uncertain economic climate, companies tend to look for more short-term, lower risk agreements that don’t swallow up capital and can be terminated or up-scaled quickly. We’re obviously conscious that there is a degree of uncertainty at the moment and believe that we have a product that’s attractive for those who want to preserve capital and reduce risk.”

Hiring new vehicles also ensures that you stay compliant with emissions and safety legislation without having to eat into capital. Learn more by downloading our free eBook: Brexit: The 5 key areas fleets need to be aware of

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Topics: Brexit

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