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Brexit and the automotive industry: an update

21st October 2019 | Mike Lamb

Yes, we know – it’s that dreaded “B word” that everyone has had more than their fill of. Unfortunately, whilst everything is still shrouded in uncertainty, precautions have had to be taken by many industries and the automotive sector is no different in that respect.

In the event of a “no deal” or “hard” Brexit, we may find ourselves having to pay tariffs on goods imported into the UK under WTO (World Trade Organisation) terms, cars are no different in that respect. Vehicles imported to the UK are expected to attract a 10% tariff (quite a considerable increase in price on some vehicles) with the following manufacturers already advising on what will happen should we “crash out” of the European Union: Vauxhall, Audi, Skoda, Mercedes, BMW & Renault.

The long and short of all of these statements is essentially that the cost of the 10% tariff will be passed on to the end user, there is some price protection to be had but the eligibility for this changes from manufacturer to manufacturer. If you currently have a vehicle on order that may not arrive until after the 31st October, it would be advisable to contact your supplier to check whether it is price protected.

But it doesn’t stop there; manufacturers who construct vehicles in the UK will also no doubt have a “price increase” even if they don’t openly admit that they are passing on the penalisation of a tariff. Although the vehicles are manufactured in the UK, they will no doubt use parts manufactured in the European Union, this could be something of little value like wiper arms where they can swallow the cost, but could also be more expensive items like sat nav systems, alloy wheels or ignition electronics whereby 10% could equate to around £100 per unit. If the cost to manufacturer increases, that cost is always (eventually) passed on to the end user and the knock on effect of Brexit will be no different.

If you currently have a vehicle on order through Tilsun Leasing and want some clarification as to what to expect in the coming weeks and months, don’t hesitate to get in touch with your Business Development Manager or call us on: 01606 545 900

Until we are sure of what will happen it is hard to plan ahead but one thing is for sure, it would be advisable to tuck a little extra money away to cover the increased costs which we may have to endure for a period of time, following our eventual exit from the Union.

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