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Preparing for a no deal brexit: the facts and figures

The prolonged period of upheaval caused by ongoing Brexit negotiations has caused inevitable economic uncertainty within the UK. This, combined with the decline in demand for diesel vehicles, has led to a “significant drop in investment, car sales and manufacturing over the last two years” (SMMT). However, now the general election is behind us and some of that certainty has returned, buyer confidence is strengthening in tandem with the value of the pound. Expectations are therefore that the health of the automotive industry, as with others, will begin to improve accordingly.

Nevertheless, despite this good news, the threat of a no deal Brexit and the unavoidable changes this will have on the motor industry still looms. The exact consequences of a no deal Brexit will not be quantifiable until we know more about that particular exit strategy. However, in order to promote as much clarity as possible, we have compiled data from leading automotive authorities including the SMMT, CAP HPI and Which? as well as the manufacturers themselves to aid those considering their car leasing options both in the short and long terms.

Please note: at the time of writing we have no confirmation on exactly how Brexit will conclude or if we will exit with a deal in place. This lack of knowledge forces us to prepare for a worst case scenario and the below is relevant only in the event of a no deal Brexit on January 31st.

Brexit for car buyers

There are two main ways that a no deal Brexit will affect car buyers. The end to frictionless trade will lengthen the lead time on vehicles not yet in the UK due to extra checks on the transportation of both parts and finished models. The extra tariffs applied to the same movement of goods and will inevitably also lead to price increases for consumers.

These changes are unavoidable in the long term following a no deal, but what does it mean if you are in the market for a new lease car, or have ordered one already?

Could Brexit affect the delivery date of my new lease car?

Without the benefit of free movement currently utilised throughout Europe, a no deal Brexit would affect both how long it takes your new car to be built and also in getting it from the factory to your driveway.

Very few cars are built within the UK without any transfer of parts from abroad. Therefore this change is likely to affect many vehicles, not just those imported into the UK. No one is yet able to quantify the length of delays expected while manufacturers readjust to the newly required procedures resulting from a no deal Brexit.

If you have ordered your car and it is both built and on British soil before the UK leaves the EU without a deal, you are unlikely to be affected. If your car is in production or is still abroad at this time, you could face delays. Our leasing consultants will keep owners of any affected orders informed accordingly.

Tip: If you are looking for a new car, stick to in stock lease deals as this will mean your order will not be affected by lead time disruption.

Could Brexit mean you pay more for your car?

For countries within the EU there are no tariffs on cars imported/exported from within EU countries. Unless a deal is struck that confirms otherwise, if the UK completes Brexit without a trade agreement it is expected that a 10% tariff will apply to cars exported to and imported from the EU.

The brunt of this price increase will be felt by the consumer and again this will be inevitable in the long term. However, it varies from manufacturer to manufacturer as to their stance on this for orders placed before Brexit takes place.

While some manufacturers have confirmed that they will price protect orders placed before Britain’s exit from the EU, this isn’t always the case. All orders placed after the conclusion of a no deal exit will face price increases corresponding to the tariff changes.

As a broker of the best available prices, we are committed to remaining competitive and will continue to do so as the market realigns. However, as the lease deals you will find from us are dependent first and foremost on the original value of the car in question, our prices will inevitably be reflective of these increases.

There is likely to be a short period following confirmation of our exit strategy in which all rates will need to be reviewed. Manufacturers will be required to amend their vehicle and option prices in order to take any new taxation tariffs into consideration. We and our partners will ensure these changes are reflected online as quickly as possible. However, we apologise for any inconvenience caused during this adjustment period.

Tip: if you in the market for a new car, beat post-Brexit price increases by placing your order before Brexit takes place. However, some manufacturers are likely not to honour pre-Brexit prices on cars that are not delivered before the 31st January so please ask the advice of your dedicated Leasing Consultant.

How can Carparison help you?

No matter what outcome is confirmed on January 31st, the Carparison team will work relentlessly to ensure both current and new customers are kept informed of any changes that will affect their ongoing order/s. As always, each customer will be provided a dedicated leasing consultant who will be on hand to help with any questions or concerns.

Nevertheless, we urge car buyers to remain informed around how a no deal Brexit could affect the cost of their lease car if their vehicle is expected to arrive in the UK after Britain leaves the EU without a deal in place. Equally, if an exit deal is secured we will provide a further update based on the specifics of that agreement when we have them.

Further reading

If this is a topic of interest to you, we recommend also visiting the following sources:

Automotive Brexit myths busted
Brexit and the automotive industry: fact and figures

If you are considering ordering a lease car but are concerned about whether a no deal Brexit may affect it, request a call back from one of our trained Leasing Consultants who will be happy to help.

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Posted on 20th January 2020 at 2:08 PM

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