Brexit could add £1,800 to the price of a new car

Friday, 9th October 2020, 8:00 am
Updated Friday, 9th October 2020, 8:02 am

Some of Britain’s best selling cars could get up to £1,500 more expensive if the UK fails to reach a trade deal with the EU before the end of the year.

Buyers could end up paying at least £1,000 more for popular models including the Ford Fiesta, Vauxhall Corsa and Volkswagen Golf as car makers pass additional tariffs on to customers.

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If no trade deal is struck before December 31, new cars imported from Europe will become subject to a 10 per cent tariff under World Trade Organisation (WTO) rules. Around 70 per cent of new cars sold in the UK are imported from the EU and there are currently no tariffs applied to them.

The trade body for the car industry has previously warned that such a situation could push the average price of a new car up by as much as £1,500, but industry insiders have suggested it could be as much as £1,800.

Impact of WTO tariff on UK's best-selling cars

(Table: Which?)

Consumer group Which? asked some of the biggest brands in the UK what approach they would take if a 10 per cent tariff was applied. Several, including Ford, Volkswagen, Vauxhall, Mercedes and Citroen said they would be forced to increase their prices to reflect the new tariff.

Ford’s managing director, Andy Barratt, told Which? a WTO tariff would put prices of passenger and commercial vehicles up by between £1,000 and £2,000. Mercedes also said that car prices would increase in line with any introduction of tariffs at the end of the Brexit transition period.

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Groupe PSA, which owns the Vauxhall, Peugeot, Citroen and DS brands, told Which? any additional duty would be passed on to customers while the Volkswagen Group, which controls VW, Audi, Seat, Skoda, said it “may need to adjust car prices to reflect any imposed new vehicle import tariffs”.

However, some manufacturers have said their prices are unlikely to be affected regardless of what happens. All of Mazda’s cars and most of Honda’s models are built in Japan and the UK is currently negotiating a separate trade deal with the country.

A Volkswagen Golf could be at least £1,400 more expensive if no deal is struck (Photo: Volkswagen)

Other brands, including Nissan, Toyota, Jaguar Land Rover and BMW/Mini either didn’t respond to the Which? enquiry or said it was too early to speculate on their position.

Most of the manufacturers, however, did say they would protect the price of any car ordered before the end of the year but delivered in 2021 so customers who have already committed to a new vehicle would not be affected.

The Society of Motor Manufacturers and Traders (SMMT) has warned that failing to secure a no-tariff deal could cost the new car industry three million sales over the next five years.

Its chief executive, Mike Hawes, told Which?: “We are calling for an ambitious deal with the EU that guarantees zero tariffs and quotas, and avoids other barriers to trade.

“Such a deal would help maintain choice and affordability for drivers – and would also support our iconic automotive manufacturing industry in retaining its global competitiveness, protecting jobs across the country.”

A 10 per cent tariff on the customs price of a new car would translate to a 6.3 per cent increase in the showroom. That would add £1,000 to the price of the best-selling Ford Fiesta but have a far greater impact on more high-end vehicles. Which?'s research estimates that an entry-level BMW X5, for example, could cost £3,726 more.