Classic car sector to fight back against draconian EU and environmental rules
Published: 26 May, 2021
Complex EU import rules and environmental concerns could put the classic car scene at risk of disappearing along with 113,000 specialist small businesses and supply chain jobs across the UK, a new trade association for the sector has warned.
The Historic and Classic Vehicles Alliance (HCVA) launched this week, with a mission to promote the sector. It is urging government to use post-Brexit regulatory independence to help the sector grow.
The not-for-profit organisation will campaign on behalf of the classic vehicle world including specialist restorers, dealers, parts suppliers and a broad cross section of the industry. The HCVA is highlighting the fact that the classic vehicle industry faces complex new rules around the export and import of cars and parts to and from the EU, as well as the impact of environmental legislation that seems to misunderstand of the environmental impact of vintage motoring.
The organisation says annual turnover, including international trade, is estimated at £18.3 billion, with the value of the three-million cars in the British classic fleet believed to be more than £12billion. The annual tax revenue generated for the exchequer is close to £3 billion.
HCVA Director Harry Whale said: “Our sector is a great British success story and has been for decades. But it’s in serious jeopardy and may not survive to continue providing opportunities for future generations if we don’t act now. In a world of mind-boggling bureaucracy, with environmental and other legislation looming, we need to ensure the voice of the industry and owners is heard and understood by regulators and those in power. We’ll work hard for the whole sector. We’re taking the initiative now to address current challenges, clear up confusion and grasp opportunities to find solutions. These problems span the world and we’re determined to take a long-term view as we campaign to secure the future.”
The industry is spread right across the country, with clusters of specialists operating in the West Midlands, Lancashire, Kent and Sussex – and only 5% of activity based in London.
East Sussex MP Nus Ghani has classic car trade firms in her constituency. She said: “We need to do all we can to support a sector that provides thousands of highly skilled and well-paid jobs in my constituency and across the UK and preserves exemplary skills and craftsmanship. We should be looking for ways to help businesses find solutions to problems and, now more than ever, we should be making it easier – not harder - for reputable high-quality companies to serve their customers. In the current economic climate we certainly can’t afford to risk letting valuable jobs die.”
For more information, visit: www.hcva.co.uk
- N.I Car parts supply to improve following UK/EU Windsor Framework?
Access to car parts for garages in Northern Ireland could improve, following the deal on trade between the UK and the EU, agreed today (Monday 27 February) by Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen.
- Car dealerships set to reopen in April
Car dealerships are likely to remain closed until April at the earliest, it was revealed yesterday (Monday 22 February).
- Quick reaction
BM Catalysts, UK manufacturer and exporter of catalytic converters, DPFs and front pipes, is no stranger to adapting rapidly to meet the ever-changing industry, consumer demand and diverse vehicle car parc. The firm believes that reacting sooner rather than later can offer more opportunities to forward-thinking aftermarket companies.
Ahead of Brexit on 1 January 2021, BM Catalysts launched an online Brexit resource to offer advice and guidance on the new rules. The company says any problems encountered as a result of Brexit will be “short term” and it can already see improvements in trade supply routes.
The brand also reverted to a short-term buying strategy of volatile raw materials like rhodium and palladium to remain competitive as the prices of precious metals remain unsettled. By reacting quickly to both Brexit and fluctuating precious metal prices, BM Catalysts has been able to create efficient processes and strategies to stay ahead of the game.
Brexit issues short-term
With the company investing considerable time and resources into preparing for Brexit, it has ensured that the necessary infrastructure is in place to help facilitate supply of its products as seamlessly as possible to customers in over 35 countries worldwide, despite the challenges.
From its UK manufacturing base, customers also continue to receive dedicated sales and technical support, alongside marketing support to help develop and grow sales of BM Catalysts’ ever-increasing product offering.
BM Catalysts has been working closely with logistics partners on new systems and additional paperwork for customs and border controls. Nearly all BM Catalysts catalogued part numbers meet the standard required to claim UK origin, meaning they are not subject to tariffs under the Free Trade Agreement between the UK and EU.
It’s been taking a little longer than usual for overseas customers to receive their orders as a result of changes to customs procedures and clearance, but we’re seeing this time shorten every day.
From when the order is placed to the point of dispatch, lead times from our end remain the same and we’re fulfilling 100% of all orders thanks to our high availability of products.
We’re confident in our process. It’s not the first time we’ve had to navigate through difficult times with changing legislation and we thrive in these situations, putting in place solutions to help ensure the best possible working partnerships for our customers.
Volatile precious metal prices
Raw materials used in the manufacturing of catalytic converters continue to fluctuate rapidly, prompting BM Catalysts to revert to a short-term buying strategy of precious metals to remain competitive and ensure that when the commodity prices reduce, these savings can be passed on to the marketplace quicker.
Over the past two years, precious metal prices have increased significantly. Rhodium, used in the manufacture of catalytic converters, is one of the most expensive precious metals. It’s also one of the rarest elements on Earth and arguably one of the most volatile pricewise, having begun 2020 with a value of just over £4,000 per t oz before increasing a huge 210% over the following 12 months. At the time of writing, it remains volatile with sudden rises now common, with the price having increased by 60% since the start of December alone. It is now trading at well over £20,000 per t oz.
What’s causing the price rises?
There are many factors influencing the sharp rise in precious metal prices, in particular rhodium, which has left the price of gold in its wake. The main use for rhodium is in catalytic converters that are designed to clean vehicle emissions. Rhodium, amongst other precious metals including palladium and platinum, act as the trigger for the chemical reaction which starts to break down harmful exhaust gases. The global drive to improve air quality, particularly in areas like China and Europe, has seen demand surge for rhodium and palladium. Furthermore, the move from diesel to petrol trend puts additional pressures on rhodium supply which is not used in diesel applications. This tightness of supply is another contributing factor to its sky-high price. More than four out of every five ounces of rhodium are mined in South Africa, extracted in minuscule quantities alongside more abundant metals such as platinum, palladium and gold.
According to a market spotlight by Heraeus Precious Metals on 1 February 2021, while rhodium availability looks set to improve: “A fundamentally imbalanced market will keep prices at historically high levels.” The report also pointed to the lengthy refining process of rhodium as an indicator of prices remaining high as demand still exceeds supply.”
Catalytic converter thefts rise
London Police are reporting a 50% increase in the theft of catalytic converters compared to the same time in 2019, as precious metal values continue to soar.
Motor insurer Admiral says it received 400 claims in one month alone in 2020 for damage caused to vehicles from the theft of catalytic converters. It also says that thieves are focusing on hybrid cars as the catalytic converters found on these vehicles contain a higher concentration of precious metals and are generally less corroded.
Police in Kent say they are “relentlessly pursuing” thieves after seeing an increase in catalytic converter crime in the area. Criminals are able to steal the catalytic converters in under a minute and are carrying out the offence in broad daylight. This flurry of crime in Kent has led to the local police offering garages in the area permanent security-marking kits for technicians to mark the catalytic converters on cars when they are brought in for a service. That way if the part is stolen, it will be harder for the thieves to sell on, and easier for police to locate, identify and return to the owners if it’s recovered.
What is the long-term outlook?
In 2008, rhodium touched £5,560 per t oz as the global financial crisis hit, which then saw the metal price crash by 90% just weeks later. This was an artificially high price and is unlike the price rises we see in the market today. The current price of rhodium has never been seen before and with that brings the risk it could crash again like in 2008. With so much uncertainty over the future of the price of this rare metal, 2021 could be another volatile year with either regular price increases or a sudden drop. BM Catalysts’ short-term buying strategy helps ensure prices remain competitive if precious metal prices drop significantly.
Although the automotive sector is the primary consumer of these precious metals, demand, and therefore cost influences, also come from buyers such as jewellery makers and commodity investors. An increased cost of the precious metals used in the making of catalytic converters has to be reflected in their sale price; it’s unavoidable. The price of the precious metals used can be up to 90% of the overall cost of producing a catalytic converter, underlining the fact that the price of parts is dictated almost entirely by the market performance of these metals.
Insight is essential
Ongoing education and insight are key, and therefore it is important to offer support and continually listen to partners and the wider aftermarket. By working collaboratively BM Catalysts is able to identify trends and potential issues and adapt accordingly to stay one step ahead.
- UK car production: Worst since 1956
UK car production in 2021 was the lowest since 1956 according to the latest figures from the SMMT, eclipsing even 2020 as the effect off the worldwide semiconductor shortage, staff shortages and the ongoing aftershocks of the Coronavirus lockdowns continued to impact on the sector.
- UK car production lowest since 1956
UK car production fell 9.8% in 2022, according to the latest figures from the SMMT, giving last year the lowest annual production total for the country since 1956. Facing ongoing semiconductor shortages and ongoing COVID-19 related problems, UK car factories managed to pump out 775,014 units. The total was was also 84,561 units down on 2021 and 40.5% under pre-pandemic 2019, when the country managed to produce 1,303,135 cars pre-pandemic.
