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Car Leasing and Brexit

Car Leasing and Brexit

Brexit. Brexit. Brexit. Brexit... If you hear a word enough times, it begins to lose its meaning. But is this semantic satiation? Or simply that we don’t really know what Brexit will look like and how it will affect us?

As we edge towards Halloween with a ‘do or die’ assurance from the government of an EU exit by this date and all those adverts telling us how to prepare for uncertainty – we are expecting imminent disruption. But how much exactly? And are we worrying over nothing? 

The past three and a half years of striving for a ‘good’ Brexit deal has already made an impact on the UK car industry. 

Automotive Industry Exits: To protect their business from disruption, many companies have moved production away from the UK - resulting in thousands of job losses. And we haven’t even left yet. But is such a dramatic pre-emptive move proof of the great risk that Brexit brings? Or are there other factors at play? The new trade agreements between the EU and Japan, global plans to lower emissions and investment in electric vehicles have all changed the car industry as we once knew it.

Prices are already on the increase: 

  • Porsche have taken the precaution of adding a 10% tariff on their cars ahead of the UK’s exit. If you are lucky enough to be able to afford a 911, this will add another £10,000 on to your purchase! 
  • By April 2018, the car industry saw that leasing a new car had already increased by an average of 9%, with German-made cars seeing the biggest rise.
  • Currency fluctuations are causing price increases across the European supply chains. 
  • SMMT (Society of Motor Manufacturers and Traders) estimate that import tariffs could add £1,500 to the average car coming to the UK from the EU. 

What can we expect? 

Obviously, the UK government will hope to agree a deal that will limit any disruption. In the event of ‘no deal’ we can expect tariffs on imports and exports. Some leasing companies may choose to take a hit, hoping that it is temporary and short-lived – but prices are expected to rise across the industry. 

Currently, Car Leasing Companies in the UK are regulated under EU law -so if/when we leave the European Single Market, the Financial Conduct Authority will take control. Nothing is expected to change immediately, as the government will have more pressing priorities – so there should be a steady period of adjustment.

How does this affect Car Leasing? 

In uncertain times, consumer confidence is shaken - and large financial decisions are delayed until a certain level of stability has resumed. Consequently, in times of financial uncertainty it makes sense to lease your perfect car, rather than buy it.

  • You won’t need to worry about depreciation. 
  • You can spread the cost over several years. 
  • You can update your car every few years without a financial penalty. 

Things to be aware of after Brexit:

  • You should still expect price increases. 
  • Repair costs will increase – with the import of car parts expected to take longer and cost more. 

The leasing industry may still be disrupted by supply chain problems. To try and avoid these – aim to start the process as soon as possible to secure a lease to take you through the post-Brexit years.

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