Aston Martin: no Brexit deal could be 'semi-catastrophic' for firm

Aston Martin faces the ‘semi-catastrophic’ prospect of having to temporarily halt production if the UK government fails to secure a Brexit agreement with the European Union, the firm’s financial boss has told parliament.

Giving evidence to the Business Select Committee, chief financial officer Mark Wilson said potential problems with vehicle certification could significantly affect the company.

Currently, all new cars in the UK must secure Vehicle Certification Agency (VCA) approval, which is valid in the EU. But, if a Brexit deal is not reached, VCA validity for new models in Europe could cease in March 2019. Companies are not allowed to hold simultaneous type approval from two authorities, therefore if UK firms were forced to apply for new vehicle certification that would be valid in Europe, they would have to stop production while doing so.

“For Aston Martin, it’s simpler than for larger international players,” Wilson told the committee. “We’re a British company, we produce our cars exclusively in Britain and will continue to do so. Without VCA type approval, it really is a stark picture for us. We need to make sure that type approval carries over, has validity and recognition, and has the equivalence it has today.

“Otherwise, there are significant costs involved in gaining another type approval, but also the semi-catastrophic effect of having to stop production, because we only produce cars in the UK.”

Wilson added he was “encouraged” that a transitional agreement would be reached that would allow production to continue, but added: “During that transition, we would have to look at how Aston Martins were recertified under a non-VCA structure.”

Car industry in further clarity calls

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, and Patrick Keating, Honda Motor Europe’s government affairs manager, also gave evidence to the committee. Both joined Wilson in calling for clarity over a Brexit transition deal.

Asked whether a lack of clarity over Brexit could impact investment in the motor industry, Hawes said: “Companies don’t just make an investment at one particular point, there’s constant investment. Some investments are overdue, and some are waiting as long as possible for clarity.

“Looking at the timetable for leaving the EU, the general view is that companies need more certainty by the turn of the year, because contingency arrangements will have to be put in place to give you a good 12 months before you start.”

Calling for clarity by March 2018, Keating said that it would take 18 months for Honda to get its systems ready for potential new customs procedures for exporting to Europe. Noting that Honda imported two million components from Europe each day, he estimated a 15-minute delay at customs would cost the firm £850,000 a year, because the company carries just one hour of stock on its shelves.

He added: “We’re thinking about increasing the amount of warehousing and the amount of stock we would have to hold if friction entered the border.”