Brexit: Driving Changes in The Automotive Industry Throughout UK, Ireland & Beyond

Brexit, the looming departure of the UK from the European Union, will certainly have serious consequences on various industries. Not the least of the industries that hang in the balance is the UK automotive industry. As parliament continues to bang out the details and deals, the impact Brexit will have on the future of the automotive industry in particular in Ireland and Northern Ireland, as well as in the UK is murky. 

As it stands, the trade of goods and services between the UK and EU is relatively free of restrictions. Because the Republic of Ireland intends to remain in the European Union after the UK’s departure from the EU, Northern Ireland (which is part of the UK) became somewhat of a gray area. A solution needed to be devised that would facilitate newly negotiated trade deals that would include Northern Ireland without the creation of a hard border through which the transport of taxable goods would pass. 

The original plan would have created an “Irish backstop” allowing Northern Ireland to remain operating under EU rules regarding tariff exemptions and regulations. However, this plan was scrapped when Boris Johnson took over as UK Prime Minister. The new plan creates a workaround where tariffs on goods exported from all other areas of the UK to Northern Ireland will be paid initially prior to crossing the Irish Sea. Goods that remain in Northern Ireland will be subject to a refund of the previously paid tariffs, while those that are moved into the Irish Republic will not have tariffs refunded. These tariffs focus mainly on goods considered to be at risk of being transported into the Irish Republic once they’ve passed into Northern Ireland.

How Will Brexit Impact the Auto Industry in the UK, Northern Ireland & the Irish Republic?

Where does this plan leave UK auto manufacturers and sellers, who’ve benefited greatly from the free trade between EU countries? Some experts in the UK automobile industry are projecting the veritable extinction of certain sectors of UK auto manufacturing. 

Should a “No-Deal” Brexit happen, obliteration of the UK’s representation in the customs union could result. Because most UK car companies operate on a “just in time” production schedule where raw materials and automobile components are shipped on an as-needed basis, time delays caused by customs processing and added tariffs would significantly impact production times. Subsequently, the necessary carrying of additional inventory would cut into profits. Without a customs union to negotiate external tariffs, the auto industry stands to suffer.

Auto manufacturing and sales aside, other automotive areas that stand to be impacted by the changes Brexit will bring include transportation, logistics, and travel.  

Brexit Impact on Logistics

As mentioned regarding the auto manufacturing industry, logistics for other industries that operate on a just-in-time basis for raw materials and production components may be wise to employ the usage of UK depots for temporary storage. Delays that may result from customs processing could impact transport times due to tachograph regulations, so here investment in holding depots could again be beneficial. 

It is also anticipated that delays at the ports, as well as at the British land bridge will impact Irish exporters who send their goods both to mainland GB as well as to the rest of the EU.

Driving in the Irish Republic and Northern Ireland Post-Brexit

Residents of Northern Ireland will still be able to drive in the Irish Republic using their NI driving licenses post-Brexit. However, those residing in the Irish Republic and using a NI driving license will be required to exchange their licenses for Irish ones prior to Brexit. Those who wait may have to apply for a learner’s permit and take the Irish driving test anew.  

Conversely, residents of the Irish Republic will be able to drive legally throughout Northern Ireland on their Irish driving licenses as long as they have proof of auto insurance with a motor insurance green card or other valid insurance documentation.

Bus and coach drivers from the UK may need extra documents to drive in the EU and EEA After the UK leaves the EU.

The Future of Brexit for Northern Ireland and the Irish Republic

While many of the details of the Brexit agreement are still evolving, the transition period ending in December 2020 will surely help guide future decisions regarding trade and regulations throughout Ireland, Northern Ireland, and the rest of the UK. Four years following the end of the transition period, Northern Ireland will have the opportunity to vote on pertinent terms of the agreement to better support its standing in the new post-Brexit trade landscape. In the meantime, keeping abreast of changes in policies and procedures will help drive a positive outcome for the automotive industry in the region.

Author: Giles Kirkland