How will Brexit Affect the Used Parts Business?
15 months on from the Brexit vote and we look at how the result has affected the construction equipment parts business. The most immediate effect has been the decline in the value of Sterling. At one stage it dropped to its lowest value in 31 years. Last Week €1 would get you £0.93 GBP. Two years ago the same Euro would only get you £0.72. This has resulted in a huge boost to companies exporting used machinery parts out of the UK.
Inflation on the high street has not yet transferred into higher cost prices for parts suppliers, who source their stock within the UK. However, where a UK used machinery parts supplier needs to import parts, they can not source in Britain, prices have increased significantly.
Currency fluctuations will always be with us and it is difficult to hedge against the impact. Especially as most used parts suppliers buy stock when it is available, rather than waiting for a favorable exchange rate.
The final outcome of Brexit negotiations is still unknown. However, a “Hard Brexit” is more likely today than it was 12 months ago. If this is the case then it’s still unlikely to have a major impact on the used parts business other than currency values. Many commentators predict a worst case scenario of World Trade Organisation (WTO) rules on international trade. Under WTO rules there are no tariffs applied to the import or export of construction and agricultural equipment parts (Annex 5 of WTO document TN/MA/S/13). It is unlikely that The EU and UK would negotiate tariffs that would be higher than what is currently in place under WTO rules.
Due to its global reach, suppliers on UrParts.com can take advantage of low currency values in their local market by exporting to buyers located in markets with higher value currencies.