Will the UK Car Industry Be Affected by Brexit?

When the UK officially exits the European Union on March 29, 2019, it is expected that there will be a period of transition through to the end of 2020. During this period, it's foreseen that EU regulations will be enacted as new UK laws where it's necessary to do so. With goods trading, it's still somewhat uncertain about how the EU will operate with goods for import and export.

Transitional Period

During the expected transitional period, there will be some degree of an overlap as UK laws begin to replace previous EU laws. The need to pay for road tax certainly won't change, but regulations over vehicle emissions, technical requirements, and approval of a vehicle based on type categorisation might change here and there.

2021 and Beyond (EU27)

For car manufacturers based in the UK, they'll still need to comply with applicable EU regulations for the vehicle to be accepted in the European marketplace. Whilst this might seem like nothing has changed in this regard, that's not necessarily so.

An EU member state might require certain tests to be performed within the EU to verify that a vehicle or vehicle type is suitable for sale in their member state. This could invalidate any test performed in the UK if one was even required to be performed, and could make selling UK-produced cars in the European market a little more challenging for manufacturers.

It should be noted that the EU does already accept approvals for out-of-Europe testing performed in the US, Canada and Switzerland. While there's no such agreement with the UK as yet, this could come into force at a later date making life easier for UK manufacturers partly or fully focused on European exports.

Post-Brexit – Compliance for UK Sales

Given that the UK is part of the UNECE agreement of 1958, it's not expected that compliance to sell within the UK will change all that much. As a separate member of UNECE to the EU, the UK's membership is unaffected by Brexit. A lack of or a poor trade deal with the EU is unlikely to alter that.

Furthermore, it's anticipated that the UK regulations will be similarly updated to mirror much of the current EU legislation across a broad range of industries, including the automotive industry.

Given the foregoing, it's felt that car manufacturers won't be wrestling with two different batches of regulations in the aftermath of Brexit when selling vehicles to UK customers.

What Next?

It's sensible for UK companies to retain legal counsel to consider how new laws in both the EU and UK will affect their business and trade going forward. Companies should be mindful that the earth will be moving under their feet with all the regulatory changes, so they'll need to stay nimble to adjust their manufacturing, testing and sales practices to stay in line with the latest rules and regulations.