The EU: In, out, shake it all about.... (254 Viewers)

[skybluetony176]

No the purpose of a tariff is to restrict trade and the importer pays the tariff and distribution costs. The problem of course is that exporter faces a dilemma of losing the contract or seeing demand reduce. It ends up reducing the price of the goods sold to retain market share.

So you say no but then explain why it impacts both, just like I said. Aww, you’re special.

At least you didn’t quote a post that I saw on Facebook recently that claimed that no deal was the best deal because Germany would have to pay our import tariffs on BMW’s, VW’s, Audi’s and Mercedes. I’ll give you credit for that.

 

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[Sick Boy]

And Tony what percentage do the uk make up of that?

I think the 2 main countries are the UK and Germany, off the top of my head.

 

[Grendel]

So you say no but then explain why it impacts both, just like I said. Aww, you’re special.

At least you didn’t quote a post that I saw on Facebook recently that claimed that no deal was the best deal because Germany would have to pay our import tariffs on BMW’s, VW’s, Audi’s and Mercedes. I’ll give you credit for that.

No Tony the importer never pays a different price the exporter just slashes their margin and / or future prices below inflation to compensate

 

[skybluetony176]

I think the 2 main countries are the UK and Germany, off the top of my head.

Belgium is a bigger trading partner than us with India.

 

[Sick Boy]

We went over tor Fuertaventura for a 4 day mini break and ended up sitting next to a proper Brexiteer with a Union Jack passport cover. We actually had a pretty good chat on the plane and both came to the conclusion that whatever happens us ordinary people will probably get shafted.

 

[skybluetony176]

No Tony the importer never pays a different price the exporter just slashes their margin and / or future prices below inflation to compensate

You recon. I can tell you for a fact that the supplier we deal with isn’t slashing anything. It’s a conversation we’ve already had with them and they very much see it as our problem to solve should it arise. Sounds like another assumption on your part. They’ve also appointed a distributor in Germany because of Brexit. All enquiries that they used to get for the EU they used to filter through us. That stopped last year. We also can’t be proactive in the EU anymore with their products as a stand-alone item. If we package it with what we make ourselves or it’s an existing customer fine but no new business. We had to sign a new distributor agreement them in November and it’s very different to the previous one, because of Brexit. It also runs out in November 2019 whereas previous agreements have been 10 year agreements so were already having to prepare for losing the distributor rights.

 

[Grendel]

You recon. I can tell you for a fact that the supplier we deal with isn’t slashing anything. It’s a conversation we’ve already had with them and they very much see it as our problem to solve should it arise. Sounds like another assumption on your part. They’ve also appointed a distributor in Germany because of Brexit. All enquiries that they used to get for the EU they used to filter through us. That stopped last year. We also can’t be proactive in the EU anymore with their products as a stand-alone item. If we package it with what we make ourselves or it’s an existing customer fine but no new business. We had to sign a new distributor agreement them in November and it’s very different to the previous one, because of Brexit. It also runs out in November 2019 whereas previous agreements have been 10 year agreements so were already having to prepare for losing the distributor rights.

Yes Tony I “recon” because of years dealing with pricing strategy and impacts of global changing tariffs

 

[Astute]

You recon. I can tell you for a fact that the supplier we deal with isn’t slashing anything. It’s a conversation we’ve already had with them and they very much see it as our problem to solve should it arise. Sounds like another assumption on your part. They’ve also appointed a distributor in Germany because of Brexit. All enquiries that they used to get for the EU they used to filter through us. That stopped last year. We also can’t be proactive in the EU anymore with their products as a stand-alone item. If we package it with what we make ourselves or it’s an existing customer fine but no new business. We had to sign a new distributor agreement them in November and it’s very different to the previous one, because of Brexit. It also runs out in November 2019 whereas previous agreements have been 10 year agreements so were already having to prepare for losing the distributor rights.

You should become an author. Because you are a teller of tales.

 

[fernandopartridge]

No the purpose of a tariff is to restrict trade and the importer pays the tariff and distribution costs. The problem of course is that exporter faces a dilemma of losing the contract or seeing demand reduce. It ends up reducing the price of the goods sold to retain market share.

Indeed, tariffs are purely about protectionism nothing to with protecting consumer pricing

 

[skybluetony176]

Yes Tony I “recon” because of years dealing with pricing strategy and impacts of global changing tariffs

In one industry. That doesn’t give you view of every industry. Certainly not the one I work in.

 

[Astute]

In one industry. That doesn’t give you view of every industry. Certainly not the one I work in.

Story teller?

 

[Grendel]

In one industry. That doesn’t give you view of every industry. Certainly not the one I work in.

So your view of one industry is more relevant than mine - wow

 

[skybluetony176]

Indeed, tariffs are purely about protectionism nothing to with protecting consumer pricing

You don’t think tariffs will be passed on to consumers in the guise of a price increase?

 

[Grendel]

You don’t think tariffs will be passed on to consumers in the guise of a price increase?

No because the exporter will reduce profit margins rather than lose market share

 

[skybluetony176]

So your view of one industry is more relevant than mine - wow

You seem to think yours is. I’ve told you what’s happening in mine. You may have a different experience in yours and I’m not going to argue that as I don’t know your industry same as you don’t know mine. For all I know what you say will happen in your industry will happen. It isn’t happening in mine though and you’ve generalised your industry as a yardstick for all industry.

 

[Grendel]

You seem to think yours is. I’ve told you what’s happening in mine. You may have a different experience in yours and I’m not going to argue that as I don’t know your industry same as you don’t know mine. For all I know what you say will happen in your industry will happen. It isn’t happening in mine though and you’ve generalised your industry as a yardstick for all industry.

You also don’t know how an exporter behaves and how pricing strategy is determined in a manufacturer in the face of changes in export tariffs do you?

 

[skybluetony176]

No because the exporter will reduce profit margins rather than lose market share

Again you’re generalising. There’s a saying. Turnover for vanity profit for sanity. When crude oil prices increase do Petrol stations reduce profit or does the price at the pump go up? Market share isn’t everything and if sectors of industry agree to pass extra costs on instead of slashing margins it’s the consumer who will pay same as they would when any other costs to get goods to market increases. They are going to make an exception purely for tariffs.

What is the WTO tariff on new cars? What’s the profit margin on new cars to a manufacturer? Is there enough margin to swallow the tariff? Sure I read somewhere it was between 10 and 15%. Isn’t WTO tariffs 10% on new cars? Not just complete cars though is it? Mini engines cross the channel multiple times before being installed in a car in Oxford doesn’t it? What tariffs is that going to be hit with everytime it crosses the channel? A Ford executive was quoted as saying 2.7% on engines under WTO. How is the motor industry going to absorb these tariffs on complete cars and components on such tight profit margins?

According to this article automobile manufacturers profit are often lower than that I quoted.
The 20 most profitable car manufacturers

 

[Astute]

Again you’re generalising.

That is yourself. You guessed wrong with generalisations about what a trade deal is.

 

[martcov]

No because the exporter will reduce profit margins rather than lose market share

Or build up other markets with a higher margin. The bottom line is profit not the vanity of market share.

 

[Grendel]

Again you’re generalising. There’s a saying. Turnover for vanity profit for sanity. When crude oil prices increase do Petrol stations reduce profit or does the price at the pump go up? Market share isn’t everything and if sectors of industry agree to pass extra costs on instead of slashing margins it’s the consumer who will pay same as they would when any other costs to get goods to market increases. They are going to make an exception purely for tariffs.

What is the WTO tariff on new cars? What’s the profit margin on new cars to a manufacturer? Is there enough margin to swallow the tariff? Sure I read somewhere it was between 10 and 15%. Isn’t WTO tariffs 10% on new cars? Not just complete cars though is it? Mini engines cross the channel multiple times before being installed in a car in Oxford doesn’t it? What tariffs is that going to be hit with everytime it crosses the channel? A Ford executive was quoted as saying 2.7% on engines under WTO. How is the motor industry going to absorb these tariffs on complete cars and components on such tight profit margins?

According to this article automobile manufacturers profit are often lower than that I quoted.
The 20 most profitable car manufacturers

Petrol is an absurd example and profit margins in cars that attract such duties would suprise you. Your link is irrelevant as it’s not margin per unit. Also in some markets car makers forsake profit and lose money due to having a presence and after sales opportunity (which has consistently high margins) and is compensated by other markets where profit can be astronomical

 

[Grendel]

Or build up other markets with a higher margin. The bottom line is profit not the vanity of market share.

You have zero understanding of how industry operates

 

[skybluetony176]

Petrol is an absurd example THOUGHT IT MIGHT BE and profit margins in cars that attract such duties would suprise you THOUGHT THEY MIGHT. Your link is irrelevant THOUGHT IT WOULD BE as it’s not margin per unit $3K A CAR I WAS READING FOR THE AVERAGE MERCEDES. WHATS THE AVERAGE INVOICE COST OF A MERCEDES AT THE PORT? IS 10% OF THAT GOING TO BE ACCOMODATED BY $3K PROFIT? Also in some markets car makers forsake profit and lose money due to having a presence SHORT TERM I WOULD IMAGINE, YOU CANT BUILD A SUSTAINABLE BUSINESS ON LOSS LEADERS FORESAKING PROFIT TO GAIN A PRESENCE ON A PERMANENT BASIS THATS JUST NOT SUSTAINABLE. JUST ASK WASPS. and after sales opportunity (which has consistently high margins)ACCORDING TO WHO? and is compensated by other markets where profit can be astronomical WHAT MARKETS?

You still don’t explain how an industry that works on low profit margins can absorb a 10% import tariff. You’re limited explanation also contradicts your comments on import tariffs that India impose on new cars. In that scenario import tariffs are an issue according to you. How can that be given your latest version?

 

[Grendel]

You still don’t explain how an industry that works on low profit margins can absorb a 10% import tariff. You’re limited explanation also contradicts your comments on import tariffs that India impose on new cars. In that scenario import tariffs are an issue according to you. How can that be given your latest version?

Because companies lose money selling cars there Tony

Christ it’s like talking to a baby

 

[fernandopartridge]

Again you’re generalising. There’s a saying. Turnover for vanity profit for sanity. When crude oil prices increase do Petrol stations reduce profit or does the price at the pump go up? Market share isn’t everything and if sectors of industry agree to pass extra costs on instead of slashing margins it’s the consumer who will pay same as they would when any other costs to get goods to market increases. They are going to make an exception purely for tariffs.

What is the WTO tariff on new cars? What’s the profit margin on new cars to a manufacturer? Is there enough margin to swallow the tariff? Sure I read somewhere it was between 10 and 15%. Isn’t WTO tariffs 10% on new cars? Not just complete cars though is it? Mini engines cross the channel multiple times before being installed in a car in Oxford doesn’t it? What tariffs is that going to be hit with everytime it crosses the channel? A Ford executive was quoted as saying 2.7% on engines under WTO. How is the motor industry going to absorb these tariffs on complete cars and components on such tight profit margins?

According to this article automobile manufacturers profit are often lower than that I quoted.
The 20 most profitable car manufacturers

Cars in themselves are often made at a loss against their list price. Car companies see cars as just one part of a bigger offer to the consumer. They recoup some of the loss on that sale price through finance commission and some through after sales and servicing (including selling parts).
Quite easy to absorb any notional tariffs without increasing asking price by the same amount. Not that price is necessarily that important in car buying.

 

[Astute]

Again you’re generalising. There’s a saying. Turnover for vanity profit for sanity. When crude oil prices increase do Petrol stations reduce profit or does the price at the pump go up? Market share isn’t everything and if sectors of industry agree to pass extra costs on instead of slashing margins it’s the consumer who will pay same as they would when any other costs to get goods to market increases. They are going to make an exception purely for tariffs.

What is the WTO tariff on new cars? What’s the profit margin on new cars to a manufacturer? Is there enough margin to swallow the tariff? Sure I read somewhere it was between 10 and 15%. Isn’t WTO tariffs 10% on new cars? Not just complete cars though is it? Mini engines cross the channel multiple times before being installed in a car in Oxford doesn’t it? What tariffs is that going to be hit with everytime it crosses the channel? A Ford executive was quoted as saying 2.7% on engines under WTO. How is the motor industry going to absorb these tariffs on complete cars and components on such tight profit margins?

According to this article automobile manufacturers profit are often lower than that I quoted.
The 20 most profitable car manufacturers

So things will be good for German car manufacturers if we revert to WTO rules?

Or will you look at it differently now to answer this question?

 

[martcov]

You have zero understanding of how industry operates

Well, the German car manufacturers have already said they want to build up alternative markets. If I was a share holder, I would like to see a return on my investment. In my event world, I may take part on an event at a loss or small profit in the short term because of strategic reasons, but at the same time, I would have an eye out for alternatives. Long or medium term depending on the circumstances, I would drop it.

 

[SkyblueBazza]

they've stated quite clearly it's a deal breaker for them. That's why they've been trying to thrash out the deal with the EU for 11 years.

The whisky tariffs which have been mentioned were another major stumbling block and also something to do with food standards, I'm not sure what the detail of that is or which countries this was an issue for. I don't think the UK was one but the UK were at loggerheads with them over the whisky tariffs and the visas.

How many more times..? What is said, & what the actual outcome ends up as are very often quite different.

Two initial questions based on what they have said would be: why do they want to trade with us at all? And why are they so keen for immigration to take place?

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[clint van damme]

How many more times..? What is said, & what the actual outcome ends up as are very often quite different.

Two initial questions based on what they have said would be: why do they want to trade with us at all? And why are they so keen for immigration to take place?

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well seen as they haven't been able to agree a deal with the EU despite 11 years of negotiation I'd say it pretty much is a deal breaker.

The visa issue, I think, is mainly to do with student visas and easier access to the UK university system, not so much general immigration, though I may be wrong on that. Students from India numbers have dropped 50% since 2010 due to stricter visa requirements.
This is what their PM said:

“Education is vital for our students and will define our engagement in a shared future. We must therefore encourage greater mobility and participation of young people in education and research opportunities.”

You may read something between the lines or think you can second guess him, I'm just going on what he's said.

I would be surprised if either the EU or post Brexit UK get the deal they want with India any time soon. They seem pretty difficult to deal with from what I've read and only have a handful of free trade agreements worldwide although one is ASEAN which covers a lot of south east Asia.

 

[Astute]

well seen as they haven't been able to agree a deal with the EU despite 11 years of negotiation I'd say it pretty much is a deal breaker.

The visa issue, I think, is mainly to do with student visas and easier access to the UK university system, not so much general immigration, though I may be wrong on that. Students from India numbers have dropped 50% since 2010 due to stricter visa requirements.
This is what their PM said:

“Education is vital for our students and will define our engagement in a shared future. We must therefore encourage greater mobility and participation of young people in education and research opportunities.”

You may read something between the lines or think you can second guess him, I'm just going on what he's said.

I would be surprised if either the EU or post Brexit UK get the deal they want with India any time soon. They seem pretty difficult to deal with from what I've read and only have a handful of free trade agreements worldwide although one is ASEAN which covers a lot of south east Asia.

It seems that India wants residential rights for everyone who studies here. And visas much easier to get for anyone wanting to study here. It would be open to all ages. It would end up like the system we have now where we can't choose who or how many can come to live here from the EU.

The one thing that might change with India and trade deals is they have reached a stage where they won't qualify for new deals under GSP rules. IIRC their agreement with the USA runs out next year. And they are a lot more prosperous than when the last agreement was made. So there is a good chance they won't qualify next year.

So does this mean that they will either have to make trade deals from now on or have tariffs to pay like those who sell to them? Because if the USA changes it so will everyone else. And not making deals could slow down their booming economy.

 

[Grendel]

Well, the German car manufacturers have already said they want to build up alternative markets. If I was a share holder, I would like to see a return on my investment. In my event world, I may take part on an event at a loss or small profit in the short term because of strategic reasons, but at the same time, I would have an eye out for alternatives. Long or medium term depending on the circumstances, I would drop it.

Clueless

 

[martcov]

Clueless

Daimler are worldwide and in the position to react to changes in markets.

If profits drop in the UK they can concentrate on other markets.

At least according to them:

„Our goal is to continue our global growth in all the vehicle segments in which we are represented and in the services segment. We want to thrill our customers with outstanding products and strong brands. The Asia region, and especially China, are playing a central role in our car business in particular.

Through our strong global network we are creating the foundation that will enable us to react flexibly to changing market conditions and customer wishes. We plan to continue expanding our development, service, and production units worldwide“

 

[SkyblueBazza]

Bet you have flagged Trump off for his border wall with Mexico though.

So many contradictions. If Farage mentioned anything about a border to prevent free-movement you would be after him. Merkel - you seem to support everything she says & does...even welcoming all those refugees from OUTSIDE the EU. Is that to stop them running away if the EU starts going tits-up?

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[SkyblueBazza]

If unemployment is supposedly at an all-time low, surly it means there are jobs that need to be filled?

If there are jobs available then the unemployed should be recruited/trained up specifically to fill them. Only specialised jobs should require seeking those from abroad...that reduces the need for tax to pay unemployment benefits, reduces crime given that folk are busy working instead of trying to make a quick-buck by robbing...etc

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[martcov]

If there are jobs available then the unemployed should be recruited/trained up specifically to fill them. Only specialised jobs should require seeking those from abroad...that reduces the need for tax to pay unemployment benefits, reduces crime given that folk are busy working instead of trying to make a quick-buck by robbing...etc

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Oh oh dear. Forcing people to work... Arbeitsdienst...has been done before. Not everyone can be made to do jobs they don’t want to. Not everyone is prepared to leave their family and friends to work elsewhere. Immigrants are.

We live in a democracy and no one is going to tell the unemployed what to do. Sorry to disappoint you.

 

[Grendel]

Daimler are worldwide and in the position to react to changes in markets.

If profits drop in the UK they can concentrate on other markets.

At least according to them:

„Our goal is to continue our global growth in all the vehicle segments in which we are represented and in the services segment. We want to thrill our customers with outstanding products and strong brands. The Asia region, and especially China, are playing a central role in our car business in particular.

Through our strong global network we are creating the foundation that will enable us to react flexibly to changing market conditions and customer wishes. We plan to continue expanding our development, service, and production units worldwide“

Again clueless.

For a start benefits from Asian markets have to be achieved through production in those countries. So any profits and gains made are irrelevant to the core aim manufacturers have of keeping plant production in Europe at full capacity.

Also the comment on China will be deliberate as the German finance ministry have expressed concern with Mercedes involvement in Geeley.

Like or not the main objective of a big motor manufacturer is full production - many European markets make pitiful margin returns compared to the uk for a whole host of reasons so the uk is and always will be a pivotal market fir automotive producers.