19th October, 2016 · Policy Viewpoint

Brexit – the big picture! An
update from our CEO

2 minutes to read

Peter Ustinov, the famous British actor and raconteur, once said that if ever the world blew itself up the last words heard would be those of an expert saying it could never happen.
As we arrived in London recently to spend holiday time with our daughter and her husband I was reminded of those words. All the experts said Brexit could never happen – but guess what? Hello Brexit!

I took the opportunity during that week to catch up with Mike Hawes, the CEO of the Society of Motor Manufacturers and Traders – an organisation that is roughly the equivalent of the FCAI in our market. I also met with the CEO of the National Franchised Dealer Association in the UK – a body like the AADA that represents the exclusive interests of franchised Dealers.

My main objective in those meetings was to understand ‘what good looks like’ when it comes to world class advocacy organisations. Perhaps we can learn important lessons.

But, back to Brexit…

The SMMT, along with just about every business organisation in the UK, did not see this one coming. Brexit has effectively placed government regulatory activity on hold while Westminster sorts out the path forward – and that will take time and careful planning. The net effect in Britain is a kind of high level stasis where the big end of town is waiting for someone to do something. On the flip side, however, in a very British demonstration of resoluteness, at the retail level people are buying cars at about the expected rate and are just ‘getting on with business’.

Good to see.

This UK organisation does a tremendous amount of work on economic modelling and assessing the likely future impact of connected cars and autonomous vehicle production on the entire automotive value chain, including the retail network. For example, they already know that 55% of all cars produced in Britain this year will be connected to the Internet. In just 10 years’ time that will rise to 100%.

Meeting with SMMT drove home to me the importance of scenario planning. AADA needs to be prepared for the unlikely events that experts say will never happen, as well as trying to predict the impact of those we know will definitely happen, like connected cars. Being ahead of these types of developments means we will be better placed to help policy makers and governments understand the likely impact on our businesses.

We will take this on in partnership with our policy advisors Capital Hill Advisory and our economic modellers at BDO to ensure we’ve thought about the important events that could buffet our retail world in the next few years.

SMMT deals with a range of issues that in many cases are not dissimilar to those we face in our market. In many instances, however, matters with which we are presently wrestling have been resolved – not always in ways we might favour.

Two examples are finance and insurance sold at point of sale, and the industry agreement on access to vehicle information. European Union rules have complicated the outcomes on both these topics. That said, we know that our own regulators look at policy settings in the large northern hemisphere markets and often take these as a template for their own thinking.

It is therefore important for the AADA team to understand how these policy formulations came about, to analyse the differences compared with our own market and to craft advocacy to ensure inappropriate policies are not adopted just because they apply in the UK, Europe or North America.

David Blackhall
AADA CEO