It might be time to bid adieu to your Audi and say bye-bye to your BMW, as the cost of European cars looks set to increase significantly in the wake of the Brexit referendum.
Petrolheads and new car enthusiasts are set to take a tentative step into the EU-independent version of the UK, as it’s being widely reported that one of the most significant repercussions of the leave vote will be the price of European car imports.
Regardless of whether a no-tariff agreement can be reached or not, there seems little doubt that the cost of bringing European cars into the UK is set to rise and that will necessarily translate into an on-cost to consumer. The government will not be able to subsidise newly added import tax on European purchases, so car fans that have unerring loyalty to particular brands will find themselves having to account for extra outlays like never before.
We know that in the grand scheme of things, the cost of new cars can be thought of as a relatively superficial concern, but it’s a factor for nearly every household in the country and will have a huge knock-on effect. All things related to Brexit are a MASSIVE concern right now as well, so it’s little wonder that people are starting to question how their favourite commodities are going to be impacted.
Why have we become complacent?
Maybe complacent isn’t the right word, but let’s face it; here in the UK, we have become fans of particular brands and seem to have a natural affinity with buying the same models over and over again, just in newer formats as and when finances allow. If, all of a sudden, we can no longer afford that new VW Golf or Renault Clio, because import tax has suddenly upped the costs, what on earth are we going to do?
Experts are predicting that private sales of used cars are more than likely going to increase in a big way, but when there are few other options, obviously, that will create a sellers market. This means that while new car prices increase, so too will older model costs, with savvy sellers being able to take advantage of peoples’ needs for cost-effective vehicles that can be carefully maintained for a long period of time. There is, however, a bigger problem in the sense that servicing vehicles will naturally begin to cost a lot more too.
Replacement parts, many of which will need to be imported, will be subject to import tax, delays and maybe even extra labour, which will bump the price of standard maintenance up no end. It seems to be a case of needing to identify the lesser of two evils and committing to a course of action., while understanding that both will be more expensive than in previous years.
Is the UK REALLY dependent on EU car manufacturers?
The simple answer is yes. Any society operates within a set of standardisations or ‘norms’ and in terms of family vehicles and commuter cars, we have become a nation of European car nuts. You’ll rarely find a long-distance salesman driving something other than a VW or an Audi, Ford family wagons tend to lead the pack and even younger drivers that enjoy a sporty little hot hatch focus their attention on European brands, such as Renault and Peugeot.
There are, of course, UK car manufacturers and we’ll get to them momentarily, but the people that buy them usually fit into more of a niche enthusiast mould, as the majority are considered to be luxury and expensive brands. There are a few more affordable inclusions, such as Nissan, Toyota and Vauxhall, but the models made in the UK are limited, which is why it’s more common for people to look at names with bigger ranges.
There has to be a crunch point looming in the future; a moment where car enthusiasts will have to decide whether to stomach extra costs in order to remain true to a brand that they feel akin to or compromise and choose something else. We have to wonder if those that continue to buy EU cars, once Brexit has completed, will find themselves in a doom-loop of unaffordable car finance, or of it will actually be sustainable.
How much more will EU cars cost, post-Brexit?
There’s been a lot of speculation about how much European cars will cost, once Brexit has been put into effect and the easiest answer is that nobody really has a clue. Numbers are being thrown out in a bid to either scare buyers or quell their fears, but the most frequently repeated figure seems to be that £1,500 will be added onto the cost of imported cars, in the form of tax.
The really concerning factor is that most experts have agreed that even if a no-tariff deal can be agreed between the UK and relevant trade partners in Europe, import tax will more than likely be unavoidable, which could tip the scales and make already expensive vehicles actually unaffordable. We confess to thinking about whether the lure of three years of MOT-free driving will be enough to make consumers keep considering brand new vehicles, or if that will actually still be a possibility, given that the UK will no longer be governed by the same laws as the EU.
What a minefield this is going to be to navigate! The scary part is that there will be absolutely no access to concrete figures until Brexit has actually happened, which means that we can’t plan, budget or make some preliminary decisions. The only thing motorists can do is start saving some money, just in case, but this seems like such a loose and unstructured course of action.
Would buying UK-made cars solve the problem?
In a bid to try and find a magic solution to the proposed increase in new car prices, experts and consumers have been wondering if turning their attention and loyalty to UK car manufacturers is the answer. On the surface of it, this really does seem to be a common sense solution to an absolutely unavoidable problem, but alas, it is said that significant increases in manufacturing costs here in the UK are going to amount to £2,400 for every domestic model. You have to wonder why, right? It’s because the cost of imported parts is going to drive up the overall price and delays have to be accounted for as well. For every shipment of parts coming into the country, there will be extensive customs assessments and logistics to account for and none of this will help to drive down manufacturing costs. Quite the opposite, in fact.
It’s not simply a case of finding UK parts suppliers either, as UK manufacturers tend to be categorised as luxury brands, all of which seem to favour overseas supply chain companies. For example, you wont find a Lotus without body panels from France and electronics from Germany, despite them being made in rural Norfolk.
Is it all just a case of put up or shut up?
The future looks a little grim for those that can’t wait for a new model of car to be released every year, so it’s time to start thinking carefully. Will an increase in forecourt prices be enough to deter UK consumers from upgrading regularly and giving the ‘Joneses’ a benchmark to work to? Perhaps this is just a consequence of Brexit that we have no option but to accept and adapt to?
For now, at least, it seems as though there is little than can be done, mainly because we have no way of knowing how Brexit will work, when it will be completed or what deals will be negotiated by the government. There is, however, one thing that you can be sure of; Brits will always look for a way to save money and heaven help anyone that gets in between them and their favourite car brand!