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Fallout from hard Brexit could drive up the cost of cars by £2,300

graeme paton and oliver wright | the times | 21 march 2017 

PA’s new research on Brexit and the automotive industry is featured in a news article in The Independent. The article focuses on the potential soaring cost of buying a new car in the UK when the UK leaves the EU.

Leading on our research, the article explains that Britain moving to a World Trade Organisation regime after Brexit would lead to the introduction of a 10 per cent tariff on finished vehicles and a 4.5 per cent tariff on component parts for cars.

According to Tim Lawrence, PA’s global head of manufacturing, if manufacturers pass that cost directly on to customers the price tag for a new vehicle could soar by as much as £2,372 per car.

The article goes on to say that the report found that EU exports account for around 57.5 per cent of cars sold in the UK and that a hard Brexit would therefore be “the worst case scenario” for manufacturers.

Download Brexit: The impact on automotive supply

 

Brexit: The impact on the automotive supply chain

 

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Tim goes on to say: “Any change in tariffs and regulations will immediately impact the automotive supply chain and make sourcing of assembly parts and distribution of finished vehicles more costly, forcing organisations to rethink their medium to long-term strategies.”

“Although the final position is still unknown, what is without question is that the automotive industry must assess the impact, generate options and be prepared,” he adds.

The article goes on to explain that the report also shows that European based manufacturing companies could face additional costs for exporting to the UK from mainland Europe under a hard Brexit.

Tim explains: “Increased time delays at borders, as a result of necessary administrative processes, could also impact “just-in-time” supply chains that are currently standard for the industry.”

Tim concludes: “Both the EU and the UK would benefit from keeping free trade and supply chains unaffected because any tariffs would be damaging for both sides based on today’s complex supply chain arrangements.”

Find out more about our work in manufacturing.

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