Despite the trade agreement reached between UK and the European Union, the British car industry has already suffered irreversible damage. Before the deal was reached, Nissan opted against building the new all-electric Ariya SUV in the UK while two years ago it abandoned plans to build another SUV at its Northern England plant.
Honda will close its only factory in the UK while BMW has delayed construction of the new platform for the next generation Minis and may even decide to build them in Germany or China.
United Kingdom: the agreement with the European Union may not bring the hoped-for positive effects
As part of the trade agreement between the UK and the EU, petrol and diesel vehicles must be made with at least 55% local parts to avoid paying taxes. Additionally, electric and hybrid vehicles will need 40% local parts, 10% more than what is sought by UK.
Until 2023, batteries can have up to 70% foreign parts. However, from 2024 to 2026, units will only have 50 percent foreign parts while EVs and hybrid vehicles will have 55 percent, according to Bloomberg.
Automakers will need to make changes to suppliers in the future through additional customs declarations, certifications and more to discourage them from investing elsewhere.
David Bailey, professor at Birmingham Business School, said: “Questa is still aa delicate situation with important implications and costs for the automotive sectormobilistic. Much will depend on the degree of flexibility allowed and the degree of gradual introduction“.
The Nissan Leaffor example, it is a vehicle that may not have enough local parts to avoid taxes. In contrast, the hybrid and ICE versions of the Toyota Corolla will be able to be exported to the European Union without paying duties.
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