Tuesday 16 July 2019

MAN boss spells out Brexit impact on manufacturers

There were just four weeks in which concrete decisions had to be made over Brexit if chaos was to be avoided in the UK truck market next year, MAN Truck and Bus UK’s managing director Thomas Hemmerich, told journalists on the eve of the giant IAA Commercial Vehicles show in Germany.

All truck production by all manufacturers for the UK market for 2018 had been sold already, he said.

“A no-deal Brexit would mean a 19 per cent tariff on all trucks imported after 29 March,” he warned.

He said decisions from the negotiators were needed as soon as possible “to avoid killing the business, as we truck manufacturers need to start making choices about the post-Brexit market now…

“We need to know what will happen with vehicle orders delivered in the second quarter…do they face the tariff?  If so, do we stockpile vehicles in the UK in Quarter One? Where would we keep this stock?”

He admitted: “Most of the OEMs active in the UK are preparing for a hard Brexit, but we hope it won’t come.”

One way of avoiding the 19 per cent tariff would be to follow the DAF route and assemble trucks on UK soil, in which case the duty would be only four per cent.

“But it would take two or three years to establish an assembly plant in the UK. And, as we know there would be a trade agreement between the UK and the EU eventually, such investment would ultimately be pointless…

“We are looking into a black hole on this one: the UK is the second or third biggest market for MAN.”

A hard customs border had the potential to disrupt both MAN’s production, and its ability to supply parts to British operators.

“British manufacturers do supply components to MAN… We currently have 95 per cent spares availability for British operators, but customs clearance will add one day to delivery times, even if the clearance is straightforward.

“The situation in the Irish Republic will have to change. Currently spares are supplied to Ireland via Swindon.”

MAN was, however, continuing to invest in the UK with its £20 million in dealer sites and workshops, as the manufacturer put its past woes behind it. The next five years would see the number of MAN workshops in the UK increase from 65 to 75.

The UK business was now focused upon sales and service, and expanding the number of retail customers. While MAN had made a small gain in terms of market share, the most significant increase had been in terms of retail customers, with over 200 added during the year.

UK demand for used trucks remains strong, he said.

“Our used stocks are now too low, and we are struggling to get our sales staff enough to sell. Three-year-old  Euro 6 trucks are now coming onto the market, and are getting better ‘street’ prices. The number of used Euro 5 trucks in stock is low.

“Distribution operators who only do low mileages are now having to make the jump from as far back as Euro one to Euro 6. The used truck team has done a stunning job in dealing with this. Used truck prices are going to be supported by post-Brexit increases, the values of our TGM rang are picking up big time.”

Mr Hemmerich said that the application of a 19 per cent tariff to already expensive European trucks might create openings for truck manufacturers based outside Europe.

“I’d expect more brands in the UK post-Brexit rather than less,” he postulated.

“There’s Ford, obviously, and China, when the Chinese get to Euro 6 D. Traton has a significant share in Sinotruk, so we already have a Chinese product.”

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