Car manufacturers are announcing their plans in the event the UK leaves the EU without a deal at the end of the Brexit transition period on 31 December. Any additional costs in manufacturing and importing cars risks price rises for car buyers.
Manufacturers, including Ford, Mercedes-Benz, Peugeot and Vauxhall have confirmed the prices of their cars will rise in the event of a no-deal Brexit, with others saying it would lead them to review their prices.
Some manufacturers have told Which? that they're committed to honouring the price of cars bought before the end of the transition period, but which are delivered after that date. The approach varies from manufacturer to manufacturer.
The impact on car prices
Around 70% of cars registered in the UK are currently imported from the EU. At the moment there are no tariffs on cars imported from the EU because the UK is following EU trade rules until the transition period ends on 31 December.
If the UK leaves the EU without a trade agreement, in line with World Trade Organization (WTO) rules, after this date a 10% tariff will apply to finished cars imported from the EU.
If a manufacturer passed on the full 10% import tariff, that would then lead to a 6.3% increase in the price you pay for a car (based on average prices and according to industry body the Society of Motor Manufacturers and Traders).
This is because import tariffs are levied on the customs price of a vehicle at the time of import, rather than the final price of sale. When a vehicle is sold in the UK, it will have additional taxes such as VAT and Vehicle Excise Duty added to it. Costs can also be impacted by changes in vehicle demand.
In the table below, we've added this 6.3% increase to the purchase price of the top five bestselling UK cars to see how much prices could rise in the event of a no-deal Brexit.
|
Model |
Purchase price |
With WTO tariff |
Cost increase |
|
Ford Fiesta (2017-) |
£16,640 |
£17,688.32 |
£1,048.32 |
|
Ford Focus (2018-) |
£22,210 |
£23,609.23 |
£1,399,23 |
|
Vauxhall Corsa (2020-) |
£16,415 |
£17,449.14 |
£1,034.15 |
|
VW Golf (2020-) |
£21,145 |
£22,477.14 |
£1,332.14 |
|
Mercedes Benz A- class (2018-) |
£23,755 |
£25,251.47 |
£1,496.57 |
The five best selling cars in the UK by 2020 year-to-date car registrations (SMMT data). The 'purchase price' is the latest on-the-road price of the entry-level model for each car, provided on the manufacturers' websites. Correct at September 2020.
More: Which?