Cap HPI is poised to handle any large volume vehicle price hikes from car manufacturers in the event of a ‘no-deal’ Brexit.
AM sister title, Fleet News, revealed last week how leasing companies are being warned about carmakers’ potential increases if the UK and EU fail to strike a trade deal.
Letters sent to vehicle lease provides by the likes of BMW, Jaguar Land Rover (JLR) and Mercedes-Benz reveal that a ‘no deal’ Brexit is to blame for potential price hikes.
If no deal is reached and ratified before December 31, World Trade Organisation (WTO) non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks.
That would equate to a price increase of almost £3,000 on the average UK exported car to the EU, a £2,000 price increase on UK vans exported to the EU and a price increase of £1,800 on cars and vans imported from the EU, if fully passed on to UK consumers, according to the UK Automotive Trade Report from the Society of Motor Manufacturers and Traders.
The Society of Motor Manufacturers and Traders (SMMT) recently highlighted the impact of potential prices rises on efforts to increase electric vehicle (EV) adoption.
Cap HPI has said that new pricing change data will be ready in its system and visible in the event of a ‘no-deal’ Brexit to ensure fleets can continue to price vehicles accurately and easily.
Jon Clay, head of vehicle identification at Cap HPI, said: “The team at Cap HPI has worked diligently with partners to ensure the new vehicle data systems are prepared for any eventuality.
“If a no-deal Brexit is enforced, Cap HPI has ensured it has the teams in place to process the data supplied in an agreed format with the manufacturers.”
Brexit impact on used cars
As well as assisting OEMs and fleets to co-ordinate the impact of any vehicle price changes, Cap HPI has also been offering guidance on the potential impact of Brexit on used car values.
Cap HPI’s head of forecast UK, Andrew Mee, said: “As yet there is no evidence that Brexit concerns are having a negative effect on used car values.
“An outcome that sees tariffs on new cars may result in a reduction in new cars sales, which would be good news for used values.
“In the short term, higher new car prices may pull up some used prices, especially for newer cars.”
Mee suggested that used values are still likely to fall during 2021, however, as the negative impact of coronavirus on consumer confidence, which could be worsened if Brexit has further negative impact on GDP and unemployment, is likely to outweigh the positive impact of higher new prices.
In the longer term, from three years into the future, the reduction in used supply should help lift used values, which by then Cap HPI expects will have recovered from the coronavirus impact.
Mee said: “We will not be altering our future value forecasts until we know for certain that tariffs are being introduced, how long they might last for, and post Brexit economic forecasts are updated, so that we can fully assess the broader picture.”