Brexit and the impact on the classic car market
For years, the sword of Damocles of Brexit hovered over everything. It affects political and social issues, but above all the markets. The market for classic cars is also affected. How does the UK’s exit now affect buying and selling from and into the UK after separation?
So now it has happened, after agonisingly long negotiations with all sorts of resentments and side effects, the EU and the UK have been able to agree on a withdrawal agreement. The scenario of a “hard Brexit”, an exit without any agreement on border and customs issues, was averted, but the freedoms and movements promised by a united Europe are now history.
There are enough examples of European countries that did not want to belong to the EU community for various reasons. First and foremost is Switzerland, which always wanted to retain its independence, but nevertheless does business with EU states on many contractually agreed points. However, the withdrawal of a member of the confederation is a novelty, but in practice buyers, sellers and logistics companies can certainly benefit from the experience with Switzerland.
How to plan for Brexit?
Uncertainty about the outcome of the negotiations was certainly one of the big trapdoors of the Brexit. Should we plan for a no-deal Brexit or not make any major arrangements and speculate on a regulated transition period with almost similar conditions as before? The latter would have been quite negligent, but even preparing for a no-deal Brexit did not necessarily have to be sensible, given that the results and conditions were only communicated just right before the last negotiations.
One of the aims of the Johnsons and Farages was to avoid regulations and bureaucracy. And what did they get in return? Exactly, more regulations and bureaucracy. Ask export and import companies on both sides of the Channel how much time they now have to spend on paperwork.
When you load a car onto a trailer or into a lorry, it becomes “goods”. And for these goods, on the one hand, you need a “green card” from the insurance company, and on the other hand, you also need an ATA carnet. “An ATA carnet is primarily used for the temporary duty-free import of goods in international trade and international cultural activity. It is a customs pass specifically for the temporary use of goods (e.g. trade fair and exhibition goods or goods for scientific and cultural purposes),” according to German Customs.
More bureaucracy due to Brexit
So this document is like a passport for goods, a guarantee that the items – in this case the cars – will not disappear after they enter the country. There is a set fee from the respective chambers of commerce for each carnet – currently about a few hundred euros or pounds – but there is also a refundable deposit that has to be presented. Deposit doesn’t sound so bad at first, you usually get it back. In the UK, it’s 40 per cent of the value of the goods, which wouldn’t be a huge amount for a low-priced Mini. But what if you want to bring in a multi-million Aston Martin or Ferrari?
Already specialised financing companies have positioned themselves to invest the money for you at a fixed interest rate. But precisely in the case of expensive cars – especially when it is not a question of trade but of participation in an event – a possible exclusion criterion.
For the sake of completeness, however, it must be stated with regard to trade between Great Britain and continental Europe that the markets have always been somewhat more closed in themselves than in EU countries among themselves. Right-hand drive vehicles alone were less in demand in Europe, while left-hand drive vehicles were less in demand in the UK. Over the past few years, however, trade has become much more international – also through online marketplaces – and has encouraged trade between countries. The current uncertainty, bureaucratic hurdles and higher costs have put an abrupt end to this trend.
However, a more hesitant attitude of buyers on the island and mainland is also more than understandable. The lack of clarity about the additional costs and the extra effort caused by import restrictions and duties may well lead to postponing the purchase or preferring to buy on the domestic market. Especially for younger collector cars, less than 30 years old, there is the problem of an additional 20 per cent value added tax (VAT) on the import of used cars from Europe in the UK. This makes the already expensive AMG or M5 even more expensive for a British collector.
Also auction houses that had offered European cars at local auctions in the UK now have to adjust to new regulations if they import the cars into the country only for the purpose of displaying them at auction. This is a not inconsiderable additional expense, especially as the outcome of the auction cannot be predicted.
However, the current and future effects of Brexit on the classic car market cannot be predicted too precisely at this point in time. Much is still unclear, and the COVID-19 pandemic has overshadowed events anyway. The current downturn in trade cannot be accurately attributed. How much of it is due to Brexit, how much to the pandemic? Presumably, the true extent of the consequences of leaving the EU can only be seen when border traffic is more orderly again. We can only hope that the right solutions are being worked on on both sides of the Channel to make the Brexit as bearable as possible for the classic car market. Knowing full well that the advantages of the free EU market of recent years can probably no longer be achieved.
Photo Dario Pignatelli / European Union
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