Brexit, export and the tyre wholesale trade

Reflecting on the Brexit news, prompts us to think about the part of the tyre trade the does business the most regularly on the continent – the wholesale sector. But first, let’s take a look at the car trade by way of a proxy. Following the Brexit nes, he National Franchised Dealers Association, which represents franchised car and commercial vehicle dealers in the UK, considered the impact on trading, with Sue Robinson, director of the NFDA saying:

“The UK is the second largest car market in Europe, with £35.3 billion worth of cars imported to the UK from Europe of which over 820,000 are from Germany alone, 20 per cent of their production.

“We urge the UK government to swiftly negotiate a trade deal across Europe and the rest of the world and to secure currency stability, such that there is a level playing field for our members to operate in. Clearly it is as important to European importers as it is to the UK market that a deal is put in place very quickly.”

And of course if this is true for cars it is true for tyres too. And while many tyres brought into the UK are made outside Europe (for example, we know that a little over half come from China), many of the higher value premium tyres are produced within the EU.

Import restrictions on tyres bought and sold across Europe also raise potential questions for the UK’s strong wholesale sector, which not only buys in large quantities of tyres from producer markets outside the EU (principally Asia), but also thrives by constantly trading with other European wholesalers. This process has allowed UK wholesalers to leverage positive foreign exchange environments, source stock to fill portfolio gaps and to move unwanted to stock to other parts of the continent where is it more in demand. The question is: how will it all work now the UK has voted to leave?

At the beginning of the year Tyres & Accessories took a relatively uncharacteristic political diversion, covering the news that David Cameron was on the verge of securing a so-called emergency brake on immigration following negotiations with EU leaders. Cameron hailed this as a victory, but the referendum shows that the UK electorate didn’t buy it. Now the UK is on-course to leave the European Union numerous questions remain about legislation (will tyre labelling continue and even e-marking continue to apply?); employment (as we have seen above); economics (looking at the value of the pound and the falling stock markets, it is hard to be optimistic about this); trade (dozens of new deals will need to be struck) – the list goes on.