AID Newsletter banner July 2014 the publication for automotive industry executives
Subscribe  |  FREE SAMPLE   Front Page Editions  |  Current Issue page 1  |  BACK COPIES  |  Info  |  REPORTS  |  CONSULTANCY SERVICES  |   CONTACT  |  MEMBERS 
BRIC  |  ASIA  |  DIESELS  |  EDITORIALS  |  ELECTRIC  |  NEW PRODUCT  |  PREMIUM BRANDS  |  STOCK MARKET VIEW  |  TRUCKS  |  USA  |  WESTERN EUROPE

FULL ARTICLE | EDITORIAL 
Déjà-vu - return to infamous ‘Rip-Off Britain’ days?
Peter Schmidt | Editor

Published: Wed, 06th June 2016 12:36:18 GMT
 

London traffic post Brexit 2016


Open quote signThe UK’s decision to exit the EU is likely to lead to higher UK car prices, born out of intensifying added costs stemming mainly from the now widely predicted future weakness of the pound and the conceivable imposition of future UK tariffs on EU manufactured cars and components.

The way things stand at present, likelihood is that in imminent negotiations with the EU the UK’s newly reformed government may not be granted membership of the tariff-free single market. 

That’s chiefly because today’s single market membership goes hand in glove with both the free movement of labour and financial contributions to EU coffers. 

The two main reasons why Britain voted to leave the EU in the first place. 

These conditions to single market membership are not negotiable, the EU says. 

If it stays that way, and the chances are real, both Britain’s autoindustry and UK new car buyers alike, in readiness for for today’s already ticking B-bomb (BREXIT) should reach for their hard hats. 

Less than two weeks ago the UK decided to chance its own luck by voting to leave the embrace of the European Union. 

Potentially at least, in future years that far-reaching decision could turn into a potential hammer blow for vehicle and component manufacturers on both sides of the English Channel. 

Not least for UK consumers, who are faced by the prospect of a double-digit jump in future car showroom prices. 

That’s partly because of a likely lower value pound and the added cost burden coming conceivably from future tit-for-tat UK import tariffs slapped on EU-made vehicles and parts. 

But the severity of that body blow could well be cushioned. 

The UK remains the world’s biggest export market for German-made cars. 

If history is any guide, the record shows that German carmakers - faced with the burden of a strong deutschmark in pre-euro days – and keen to keep their competitive edge, tended to absorb at least some of the financial pain from their strong currency. 

Conceivably, given the prospect of a double whammy – that’s a substantially weaker pound plus the added burden of import tariffs in future EU trade - chances are that in BREXIT Britain history could repeat itself. 

Principally, there’s now a likelihood that UK-built cars, thanks to their extra cost burden owing to the higher cost of imported parts from the euro-zone will be hit by a BREXIT-triggered future cost avalanche. 

Chances are that some if not all of these extra costs might be passed on to consumers purchasing UK-made cars. 

In a price competitive UK market, EU car exporters may follow suit, which would lead to higher UK showrooms prices for all cars, almost regardless of their country of origin. 

Again, in post Brexit Britain - compared to buyers across the English Channel - the UK’s car buying public is again facing the unpalatable prospect of paying more for their cars than buyers in EU Europe. 

If it comes to that, and the chances are real, it would be a repeat performance of the late 1990s when ‘Rip-Off Britain’ campaigns exposed the astonishingly high prices of new cars in the UK compared with the rest of mainland Europe
Close quote sign

To continue reading this article, please register for a free sample without obligation...

Please note that eagleAID.com is a subscriber-only site, and as such it can only be viewed by subscribers to the newsletter.