Logistics provider, GEFCO, says one of the impacts from the UK’s decision to quit the European Union (EU) has been an increase in manufacturers evaluating near-sourcing as a way to mitigate the weakening of sterling against the Euro.

The British pound is currently receiving a battering as uncertainty surrounds the precise nature of the UK’s exit from the Brussels club, with much speculation centering on whether or not it will be a so called ‘hard’ or ‘soft’ departure.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Today (17 January) should finally shed some clarity on the situation however, as British Prime Minister, Theresa May will imminently announce a 12-point plan thought to put flesh on the Brexit bones and crucially, whether or not the UK will continue to have some sort of access to the European Single Market or indeed, the Customs Union.

“It is interesting because although we talk about Brexit being a catalyst for change, it is really a consequence of the vote which is the change in the value of sterling,” GEFCO UK commercial director, John Stocker told just-auto. “Cars produced in Europe in euros are being sold in pounds, so there are a number of manufacturers who are passing on price increases recently.

[However] “We see in the UK there is a doubled-edged sword, which is import [ed] parts prices usually purchased on a forward basis, those contracts coming up for renewal…have to reflect the exchange change.

“The other fact of that is the benefit of 80% of UK vehicles being exported – the weaker pound is better for export. If the pound remains relatively weak against the euro, it makes sense to near-source; there is more interest in near-source. [Also] The issue with the tsunamis a couple of years [ago], there has been a trend towards near-sourcing.”

GEFCO is seeing markets holding up relatively robustly in terms of vehicle manufacture and the need to deliver product, although cites Russia as remaining problematic.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The logistics provider is 75% owned by Russian Railways (RZD) after PSA disposed of most of its stake and there are small signs the catastrophic falls witnessed in what was once touted as a potential 4m market, are starting to be arrested.

And although GEFCO readily delivers for other automakers apart from PSA, it nonetheless retains business relationships with its former parent, particularly after its recent colossal EUR8bn (US$8.5bn) five-year exclusivity agreement in which the logistics provider will manage the automaker’s entire global manufacturing supply chain.

GEFCO will design and implement global logistics and transport solutions for the three PSA Group brands, Peugeot, Citroën and DS. It will manage and optimise the entire supply chain, from sourcing components for production and assembly plants to distributing finished vehicles.

“It is one of the largest deals I have seen in my life,” added Stocker.