Chancellor aims for “bespoke deal” for banks and UK finance sector
Car companies strive to keep current financial status after Brexit.
The UK is aiming for a tailor-made deal for banks and the finance sector in the EU to help companies like Ford retain their current financial status, and to ensure consumers receive the best deals.
Four in ten Ford cars sold in Britain rely on financing supplied by Ford’s financing arm, Ford Credit Europe.
Essentially a bank which offers loans to car buyers, it relies, like other banks, on its ability to operate throughout Europe because of the UK’s membership of the EU, according to the BBC.
Chancellor Philip Hammond has now said the UK is aiming for a “bespoke” deal for banks and the finance sector in the EU, which would allow Ford to keep its current structure and offer finance across Europe from its base in the UK.
Ford Credit Europe recently opened new headquarters in Manchester, serving eleven markets across Europe, and today reported its hopes that such a deal could be secured.
A statement said: “A loss of access to the single market would affect our UK-headquartered captive finance arm, Ford Credit Europe.
“This currently operates a branch network across the single market on the basis of an EU Capital Requirements Directive passport for the provision of banking services.
“Outside the EU and the EEA, FCE as a UK-regulated bank will lose access to the passporting regime as currently designed.
“FCE’s sole purpose is to finance the sale of Ford motor vehicles and Ford cannot afford any kind of disruption to FCE’s continuity of financing.”
The car industry relies on smooth, just-in-time delivery of components from around the EU and has always been very clear it would be unhappy with the introduction of any new tariffs on cars or components.
Cars made in the UK are 25% to 42% “made” of UK components, though this varies depending on the manufacturer.
Once outside the EU, the UK would fail current “rules of origin” tests required to strike new trade deals with third parties – even those with whom we currently have deals by virtue of our EU membership.
Honda, in its submissions, has made it clear that a no-deal Brexit scenario would compromise its productivity of vehicle production in the UK. Additional costs could be around 4.5% on components, and 10% on finished vehicles.
Car manufacturing executives have met with the Chancellor and the Prime Minister in the past two weeks to press the urgency of their case and it seems the Chancellor has listened.
The executives will face MPs on the BEIS Select Committee on Tuesday, to press home their urgency in negotiating a preferential deal.