Brexit: Drivers to Bear the Brunt of Increased Manufacturing Costs

The uncertainty around Brexit is hitting businesses hard. And costs are destined to increase even more once Britain leaves the EU.

Some car manufacturers are moving their operations outside of the UK  and are already planning to pass increased production costs on to consumers purchasing vehicles in the UK.

In the current climate, the harmony of a single market enables car manufacturers to build vehicles “just in time”. This allows them to source parts from all over Europe without the expense of stockpiling parts.

With new regulations expected to be introduced in the UK post-Brexit, border delays will disrupt the tight constraints employed by carmakers based in Britain and subsequently increase production costs.

In addition, the Society of Motor Manufacturers and Traders (SMMT) estimate EU tariff on cars will cost the industry £5bn more on import and export costs.

Car manufacturers say the additional costs will be borne by consumers.


Brexit Will Increase Motoring Costs

In the event of a ‘no-Brexit’ deal, import tariffs on cars and spare parts will incur a 10% tariff under World Trade Organisation rules. It is estimated that EU tariffs will add at least £1,500 on to the cost of foreign vehicles sold in the UK.

Drivers in the UK will also bear the brunt of increased manufacturing costs given import tariffs will also be applied to parts.

Brexit has already heaped more than £2bn on to the energy sector which has seen a rise in utility bills. Oil prices will go the same way.

Drivers in Britain are already out of pocket following US sanctions on Iran. Fuel costs added another 11p a litre on to petrol price and 13p on diesel. The RAC has warned the average cost of a full tank of petrol will hit a record high of £70.

Although Prime Minister Teresa May pledged a duty freeze on petrol for the ninth consecutive year, the policy leaves a £9bn hole in the Chancellor’s budget?

How much longer will the government permit duty-free tariffs on petrol. Once the freeze on fuel duty is inevitably lifted.


What Will Brexit Mean For Mobile Businesses?

2019 has already been announced as the most expensive year to own a car. For mobile businesses, motoring costs will inevitably rise year on year.

The hike in Vehicle Excise Duty last year already added an average of £65 a year on road tax for new cars with CO2 emissions over 255g/km.

With such daunting increases for motorists, mobile businesses that rely on a fleet of vehicles could be forced to downsize and cut operations.

Whilst buying business vehicles outright puts a significant stress on business capital, leasing a fleet of cars releases cash flow that is vital for businesses to function efficiently.

Business car leasing provides a solution to some of the problems posed by Brexit.

With so many companies across multiple sectors already starting to feel the pinch of Brexit, managers need to prepare for the next two or three years now. Can your business really afford to buy a fleet of cars in a post-Brexit world?

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