Auto Prices to Rocket Under a No Deal Brexit!
Yesterday, we saw yet another historic defeat for Theresa May and the Conservative Government. MP’s of the house rejected the Brexit deal which May went to fight for in Strasbourg on Monday night. President of the European Commission Jean-Claude Junker has said that the final negotiations have taken place and there will not be a third round. This means that the UK government are now going to vote on a no deal Brexit, which leads me on to the main topic of discussion.
The UK government has said that under a no deal Brexit they will slash tariffs on imports. There is currently no tariffs on 80% of goods but this will be changed to 87% of all goods imported. However, there will be an increase on import tariffs of around 10.6% on auto imports, so we could see an average increase of £1,500 on all new cars sold in the UK. Of course, these are all imports from the EU so it would include cars such as BMW, Mercedes, Volkswagen and Audi. Volkswagen has already stated the price of the tariffs will be passed on to the customer. UK car manufacturers may be looking at this as an excellent opportunity to capitalise as it will make their cars look a lot cheaper in comparison to European imports.
Many business owners are furious about the potential drop in tariffs if there is a no deal Brexit as there is nothing to protect these owners over the price of the products they sell if tariffs become zero. It may seem confusing but for example, if a business owner can import a product that has no tax added to it they are going to go with the product which is less i.e. the product with no tax, meaning they won’t source locally. The main industry which will suffer from no tariffs is agriculture. Supermarkets and restaurants will be able to source cheaper meats from the EU with no tariffs and local farms will be unable to compete with the cheaper prices.
Overall, this is a very touchy subject for many business owners and the winners could be the UK car manufacturers. The UK consumer will lose out on prices increasing on European imports but this could attract people to purchase British made cars, or at the very least, cars manufactured in the UK. The reason for this is that there will be no additional import tariffs on car parts, so the UK car manufacturers should profit from this decision made by the UK government....