BREXIT: The Motorcycle Industry Responds

The EU’s economic and political partnership includes 28 countries, and was formed after the Second World War to foster economic cooperation; the idea being that countries which trade together are less likely to go to war with each other. Real-Riders asked key players in the motorcycle industry what they thought about the result; their comments were made in early-to mid-July.

BREXIT: The Motorcycle Industry Responds

As the biggest contributor to the EU budget, Germany is a key player, and BMW is an incredibly important brand in modern motorcycling. Phil Horton, director of BMW Motorrad told us: “BMW Group is committed to the UK, its sixth biggest motorcycle market and home to two of its brands – MINI and Rolls-Royce – and respects the British electorate’s decision to leave the EU.

“Given the current political uncertainty regarding next steps, all we can say regarding our own activities in Britain is that we continue to operate ‘business as usual’. Until we receive answers to the many open questions regarding the UK’s future trade relations with the EU and other countries, we cannot speculate about any possible impact Britain’s decision to leave the EU may eventually have on our UK operations.”

It’s a sentiment echoed by others. Kawasaki Motor Europe’s PR manager Martin Lambert gave the company’s EU perspective: “Everyone understands that Kawasaki operates on a global basis in respect of manufacturing, marketing and sales. For some time Europe has been regarded as a ‘whole market’ by Kawasaki Heavy Industries in terms of product requests and development, as well as homologation and regulation.

“The UK leaving the EU will not change this basic principle – in other words KHI will not divert from producing European homologated and Euro 4 compliant machines for what they regard as this single market, even if the UK is ultimately not going to be a fully paid-up member of the community.

“In terms of things like currency exchange, taxes and tariffs, the UK will have to take each challenge as it comes, balancing any apparent commercial advantage against any disadvantages that arise – we have two years at the current published estimate to adapt to this.

“The overriding feeling right now is that although the commercial stability of the EU has obvious advantages, it is ‘business as usual’, and UK Kawasaki customers and dealers can expect continuity while the business landscape gets used to this momentous news.”

Matt Walker is the general manager of KTM Sportmotorcycle UK Ltd. He said: “Currently there are no plans to change the way KTM operates in the UK, but if the value of the pound devalues significantly then we will have to assess the business and address changes to the market and economic situation when there is a need. But we don’t believe that will happen, so there have been no kneejerk reactions to the fact that the UK is leaving the EU and, as the third largest market in Europe for KTM, we are committed to the UK.”

David Rogers, PR communications manager for Honda Motorcycles UK, added: “A decision has been taken by the British people and Honda respects that decision. At this moment, it is not clear what conditions and rules will ultimately replace the UK’s membership of the EU. We will, therefore, carefully monitor developments.

“Outside of motorcycles, Honda prepares for the production launch of the 10th generation Civic from its Swindon plant. Honda remains committed to its business in Europe.”

With large manufacturing plants such as this – not to mention of course Triumph – it seems likely that the UK government will need to negotiate favourable trade arrangements, which may well be balanced against free movement of people, to ensure businesses aren’t stung by costly tariffs. We asked Triumph for its take on the situation, but the company wishes to remain completely apolitical, preferring not to offer any comment.

Karl Radley of Yamaha Motor UK told us: “The main issues we will face in the short term are potential uncertainty in the stock markets, exchange rates and the knock-on effect to consumer confidence. While the FTSE100 has already recovered to above its pre-Brexit position, which should help to maintain consumers’ confidence in spending, the pound continues to drop against the euro and we cannot escape the effects of this on the UK business operation.

“While we cannot influence the course of politics and the outcomes of Brexit, we will continue to monitor the situation closely and as a branch office of Yamaha Motor Europe, we will be working with our colleagues in The Netherlands to continually review our strategies going forward, to ensure that we remain competitive in the marketplace and a sustainable part of Yamaha’s European operation. As a stakeholder in the industry, we will also continue to work closely with the MCIA to ensure that we do what we can to safeguard the future of the UK motorcycle industry.

“Brexit will of course have no effect on the ongoing product development in Japan, so we will continue to bring innovation and the latest technology to consumers in the UK, as well as great value.”

The Motorcycle Industry Association issued a statement the day the results were declared: “A key benefit for our sector is that we will have much more opportunity to directly influence how the Government legislates and behaves in relation to the UK motorcycle industry and motorcycling in general. For the near term, we continue to be in the EU and current type approval and single market regulation (such as licensing etc.) will still affect us. Our trading environment will not significantly change in the immediate future.

“Question marks over what will replace the EU in terms of foreign business and trade relations will take an unknown period to conclude. In the long term, frameworks will be created and a more stable environment will emerge. In the immediate short term it is to be hoped that a weakened pound and unpredictable interest rates do not overly damage the sector’s positive recovery over recent years.”

HOW MIGHT IT AFFECT OUR KIT?

Richard Collin is national and European policy manager at the British Standards Institution – he told us: “Nothing will be changing for some time. BSI’s ambition, post-Brexit, is that the UK should continue as a full member of the European standards organizations CEN [European Committee for Standardisation] and CENELEC [electrical standardisation]. This would mean that BSI would continue to adopt European standards as British Standards, and that UK experts could still be involved in the development of European standards, as now. It would continue the reciprocity of market access across 33 countries, freeing UK industry from unnecessary burdens.

“This outcome does to an extent depend on the relationship between the UK and the EU. If the UK government were to follow an alternative approach by permitting a domestic market structure based on separate national technical regulations, then this could prejudice the UK’s continued membership of CEN and CENELEC. However, in all other circumstances it is likely that the statutes of CEN and CENELEC could be adapted to permit full membership for BSI on behalf of the UK.”

Opinions are mixed from importers and manufacturers in the UK, with Robert Culverwell, chairman of Nevis – the importers of Shark, Richa, Furygan, TCX, Interphone and more – telling us: “It was clear that a Leave vote would create some immediate financial difficulties and stresses, although so far, the fall in value of sterling has been around 9% compared to the predicted 20%.

As nearly all motorcycle helmets and clothing are imported, price increases will I think be the most immediate consequence of Brexit, not to mention the cost of travelling abroad. How much further sterling will fall and how long it will be before it starts to recover is anyone’s guess but hopefully like Nevis, other importers will have taken some measures to minimise the increased costs and at least delay price increases by buying their euros and US dollars well forward.

“My hope and feeling is that, in the longer term, the dust will settle… and we will return to normality and continue to trade with our co-European friends. The alternative would be for the Germans, French and Italians to ‘cut off their noses to spite their faces’ by imposing restrictions on the sale of their cars, motorcycles, wine etc. to the UK, but I cannot see this happening and believe that commercial sense and reality will prevail, especially bearing in mind that the UK buys more from the EU than the EU buys from the UK.”

Mark Fenwick, company manager at B&C Express, handling Arrow, K&N, UK-made Renthal and others, said: “Day-to-day it’s business as usual. Behind the scenes is where a few implications of the Brexit vote lay – for example we buy quite a bit from Europe and Japan, so the immediate effects are those of the weakened pound.

“Obviously we hedge our funds, but that only lasts for so long, and I’m guessing we shall see some small price increases in 2017, unless the pound recovers slightly… The best message we can send out is to carry on as normal and buy those products as planned.”

Nigel Wonnacott is head of communications for Brittany Ferries. He said: “Alongside motorists, many in the biker community are concerned about what lies ahead in terms of travel around Europe. Certainly, in the short term little will change: 2016 and 2017 are unlikely to see any significant changes other than currency fluctuations. In the longer term, greater cross-border controls may be put in place, but most commentators think things like visas are highly unlikely. Time will tell of course, but for now ours is a message of reassurance: keep calm and carry on biking.”

Finally, Chris Easterfood, owner of Hood Jeans, who with his wife Julie makes the company’s excellent para-aramidlined motorcycle jeans in Norfolk, told REALRIDERS: “I can only comment on the effects this may have on a small company like ours.

I know many may believe a company that has a Union Flag so prominently on its logo may have been in the Leave camp, but this is not the case. We would have liked to remain – very British, but still within the EU. This position is solely for economic reasons.

“We buy all our raw materials from Europe so even if the pound drops by only .10c then this will increase the cost of materials by at least £10,000 next year. We can hold on to prices for some time, but eventually higher costs will be passed on and I guess this will be seen in inflation at one point.

“Another factor is consumer confidence. We witnessed a recession in 2011 and 2012; in 2013 and 2014 things started to improve. 2015 was amazing for us, with sales increasing by 70%. The first six months of 2016 (leading up to Brexit) again saw sales grow by a further 10%. In the three weeks since Brexit our sales dropped by around 40% compared to the same time last year. Consumer confidence can hit retail sales very quickly, but how long this will last is uncertain.

“Again no one really knows, but I do fear the decision to leave the EU may put us back into recession. It is time for companies to knuckle down, make things work and try to lift confidence. The cards we have been dealt are the cards we will be playing, we have to get on and play the best game we can.

“Hopefully we can come out winning.”

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