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Cars to cost 20 per cent more under hard Brexit, claims Peugeot boss

Published 07 March 2019

New car prices could rise by 20 per cent if there’s a hard Brexit, the boss of Peugeot has warned. 

The price hike would apply if the UK left the EU without a deal and had to operate under World Trade Organisation rules which would mean a 10 per cent tariff on imported new cars, plus an expected 10 per cent drop in the value of the Pound.

The average price of a new car in the UK is £26,770 (according to the Society of Motor Manufacturers and Traders) and a 20 per cent hike would add £5354 to the list price. This means new car drivers with a loan on 70 per cent of the value of their car (over four years, 3.4 per cent APR) could also see their monthly repayments surge from £420 to £510.

Speaking exclusively to HonestJohn.co.uk at the Geneva Motor Show, David Peel, managing director of Peugeot UK, said: “We’ve been getting in more stock in ahead of 29 March in case there’s a hard Brexit. We’re currently holding around 25-30 per cent more new cars in stock than we would normally at this time of year just in case there’s no deal and a tariff applies."

MG ZS

Peel added there would also be an additional hit from a fall in the value of the Pound which would mean the cost of imports would increase.

“The exchange rate has recently been stable at around €1.15 to the Pound. We’re working on the idea that it will be at parity [£1:€1] if there’s a hard Brexit, so this would add another £1500 to a £15,000 car and a total of £3000 with the WTO tariffs in place.

“As a manufacturer we’ve not got the (profit) margin to absorb a change of that scale and we’ve got a website ready to go with the tariff increases in place should we need to use it.”

He added that he expected the new car market to fall by between 20-30 per cent in 2019 if there was no Brexit deal. The market is currently forecast to remain broadly unchanged from last year’s 2.37 million new car registrations.

 208618_The _Volvo _Cars _manufacturing _plant _in _Daqing _China

The impact of the exchange rate would hit the new car market more slowly than the WTO 10 per cent tariff because car brands in the UK set their factory purchase prices on fixed terms often lasting several months.

The hike in list prices will likely have a knock-on effect on monthly payments too. However, these may be softened because experts believe used car prices may also rise, meaning the guaranteed final value of a car on a finance scheme could also be higher.

While cars built in the UK would, on the surface of it, be exempt from both the WTO tariff and exchange rate fluctuations they are far from immune as many of their component parts would be imported and cost more.

Comments

   on 8 March 2019

Theres that word "could" again. Of course you can opt not to buy an EU produced car. As for the pound falling it may also rise.

Irony    on 8 March 2019

So no mainland European car manufacturer exports cars outside the EU because it makes their cars too expensive? Yet again it's amazing how any country in the world is able to exist outside the EU.

But as for car prices increasing because of the falling exchange rate ( which is pure speculation ) oh jeez! The guy needs a reality check.

Back in 2009 the pound/euro exchange rate was LESS that in is today - the pound was worth around 1.05euro. In 2015, the exchange rate was at it's peak (in recent times) at 1.43euro to the pound. Now then, who can remember Peugeot etc all cutting the price of their cars leading up to 2015 because the exchange rate was increasing?

Here's how it really works Mr Peugeot. If the exchage rate falls, your car prices increase, and if exchange rate rises, your car prices continue to increase.

Edited by Irony on 08/03/2019 at 10:55

ROBBIENUD    on 11 March 2019

So no mainland European car manufacturer exports cars outside the EU because it makes their cars too expensive? Yet again it's amazing how any country in the world is able to exist outside the EU.

But as for car prices increasing because of the falling exchange rate ( which is pure speculation ) oh jeez! The guy needs a reality check.

Back in 2009 the pound/euro exchange rate was LESS that in is today - the pound was worth around 1.05euro. In 2015, the exchange rate was at it's peak (in recent times) at 1.43euro to the pound. Now then, who can remember Peugeot etc all cutting the price of their cars leading up to 2015 because the exchange rate was increasing?

Here's how it really works Mr Peugeot. If the exchage rate falls, your car prices increase, and if exchange rate rises, your car prices continue to increase.

i I wish the exchange rate had reached 1.43 Euros to one Pound at any time over the last few years. livin in Spain on a UK pension, paid for in full over 45 years of full taxes and N.I payments, it would have made life even more pleasant. Not actually complaining, just wondering where I missed out. have seen it virtually one to one agreed. but never that high. Brian Williamson. P.S. by the way we get the basic rate of pension only, no extras, no heating allowance. no extra benefits at all. Our choice yes. but if brexit forces a return to the UK of up to 1 million pensioners at present living in EU countries, the NHS, the Social Services and so on will struggle to cope.

John of Gloster    on 11 March 2019

They will RETURN anyway...... you too?

When the going gets increasingly tougher due to age and health issues, will you return to take advantage of the NHS services?...Seen several relatives been there already, done that Spanish thing..

Remember, nothing lasts forever... not even the so called Union of Europe.

You may be sitting pretty right now, but what about next week or ...Old Father Time takes no prisoners..

David Braddock    on 12 March 2019

From the beginning of 2015 to mid 2016 the pound flirted around the 1.43 mark - www.xe.com/currencycharts/?from=GBP&to=EUR&...Y

David Mullen    on 11 March 2019

So no mainland European car manufacturer exports cars outside the EU because it makes their cars too expensive? Yet again it's amazing how any country in the world is able to exist outside the EU.

But as for car prices increasing because of the falling exchange rate ( which is pure speculation ) oh jeez! The guy needs a reality check.

Back in 2009 the pound/euro exchange rate was LESS that in is today - the pound was worth around 1.05euro. In 2015, the exchange rate was at it's peak (in recent times) at 1.43euro to the pound. Now then, who can remember Peugeot etc all cutting the price of their cars leading up to 2015 because the exchange rate was increasing?

Here's how it really works Mr Peugeot. If the exchage rate falls, your car prices increase, and if exchange rate rises, your car prices continue to increase.

In 2009 there was a world wide recession, how do you account for the 15% drop in the £ since the vote to leave? That's not speculation that's fact.

John of Gloster    on 11 March 2019

Speculators speculate... simples... Ask Sergei... High Five... ... ;-)

Are you old enough to remember £><£ around parity? Nothing new in that. FAKE NEWS is alive, thriving and harmfully unwell here in the land of the previously self-inflicted.

Johnno431    on 12 March 2019

With all the scare stories of what will happen toncar imports from the EU what will happen to cars bearing EU brands but manufactured and imported from outside the EU ?
My wife’s VW Polo was made in South Africa and imported from there to the VW dealer we bought it from in the UK - so would this car have been deemed an EU product because of the badge on the bonnet or would it be deemed a non EU product ?
At a time when so many prestigious brands including BMW, Audi and Mercedes are not made in Germany or, indeed, any other EU country we need clarification on which cars will be subject to rhese post Brexit tariffs.

hissingsid    on 8 March 2019

Just another example of "Project Fear" by the rich and powerful. The public were not fooled by it in 2016 and will not be fooled by it now. Buy Japanese, they are reliable.

David Mullen    on 11 March 2019

Your are correct, Japanese cars are reliable but will be subject to a 10% tariff under WTO rules

Marc Hodghton    on 11 March 2019

If EU manufactured cars really do go up by anywhere near 20%, they had better start cutting production now.

Marc Hodghton    on 11 March 2019

WTO rule do not preclude FTAs.

Engineer Andy    on 8 March 2019

Only those made on the Continent, if at all. One more reason to buy cars mad in Japan or South Korea. Nice for us Mazda car owners.

Robert McAuley    on 11 March 2019

One problem is that the Japanese have arrived at a free trade agreement with the EU so we may have to suffer tariffs but there are other suppliers and to leave would be worthwhile.

John of Gloster    on 11 March 2019

Have you like me observed the sudden increase of new cars bearing the logo MG large and proud on their front grills and rear hatches?

No need to turn Japanese if wanting a good car from the Far East now. Korea and China are selling some nice basic stuff which are selling well currently here in the UK.

Pulled up next to a woman in her new MG ZS SUV/Crossover in the local supermarket car park. Nice shade of blue which makes a refreshing change from the sea of grey sameness out there in recent years. She was loading her shopping into the large hatch storage area and we got chatting. She told me its the best car she's ever had. Usually buys Fords and that the equivalent high spec Ford was ten grand more! Hard to get a buyer to break away from brand loyalty. If only half what she told me is true I now see why so many are out and about and sales steadily increasing. That now in a once poisoned UK car consumer market where the names Rover and MG were shall we say, not highly regarded. How about that.

Soon after got chatting to another new MG ZS owner on the other side of the Petrol Pumps as we filled our tanks. Same favourable feedback. Now I cannot remember seeing any new Chinese MG adverts on TV or anywhere for many months. Those meejah reports on the new MG ZS SUV/Crossovers I saw were not exactly glowing... Yeah... right... what do they know. So how come the sudden increase in new MGs I see now when out and about? I now strongly suspect simple word of mouth recommendations plays a large part here. Good will sells combined with sound recommendations from those who really know from the best evidence available to them. That being real life experiences living with a product. ... that sells.

John of Gloster    on 11 March 2019

There again Robert, will the Germans, French and the rest buy Japanese instead of their supporting home product.? Fat chance of that....No they will not unlike some Nation I could mention... ;-)

gavsmit    on 8 March 2019

Car prices have already 'surged' time and time again over the past few years. Even when taking inflation and exchange rates into consideration, it's obscene how much car prices have leaped, especially when a replacement model is launched to some how justify that ridiculous jump; many small hum-drum hatchbacks in the Ford Focus class now start at over £20K - it wasn't that long ago you'd expect to pay that for a prestige exec model.

It's not just car prices either - I just got quoted £350 to service my humble i10 - I thought cars in the city car class were supposed to be cheap to run!

I'm fed up hearing greedy manufacturers scare-mongering about BREXIT because all they are doing is laying the foundations and preparing the buying public for yet another huge price rise using BREXIT as the perfect excuse for their unsustainable greed. No wonder car sales are dropping so much.

Johnno431    on 12 March 2019

We should not be shedding too many tears for car manufacturers who are trying to tell us that Brexit will force them to increase their prices.
Just over a year ago I bought my present car knowing that if I specced it beyond a purchase price of £40k th government would lift an extra £1500;for my wallet as a new tax.
At the time there was a wide choice of similar SUVs that I could have chosen under that figure but now almost all of them have a start price over £40k !
These aren’t new models - they are just price hikes on the same cars.
Isn’t it time we just said “your cars are too expensive so just keep them and we will run our cars longer.
And if foreign manufacturers close their plants in the UK that will matter even less.

hissingsid    on 8 March 2019

I suspect that high prices are fuelled by all the unnecessary extra bells and whistles which most manufacturers insist on fitting.

Cruise control, adjustable speed limiter, automatic wipers and lights, i-stop, multimedia systems, lane departure warning, blind spot monitoring system, smart city brake support etc. the list is endless.

No wonder those low tech no nonsense Dacias are selling well.

Robert McAuley    on 11 March 2019

Theres that word "could" again. Of course you can opt not to buy an EU produced car. As for the pound falling it may also rise.

Well said as the pound MAY not fall. Remember the famous Canadian economist, John K Galbraith, stated that,'' the only thing which makes economic forecasting look respectable is astrological forecasting''.
Also don't buy an EU built car and that would hit their pocket so you believe Mr Peugeot that the tariffs would be maintained - what a fool.
Additionally, I wouldn't buy an unreliable French or German car at present so why would I want to touch one with added tariffs?
We can avoid buying at all or buy a UK built car or could buy a Korean or US car or perhaps a Japanese car although the latter may not be possible as Japan has reached a free trade deal with the EU.
Yet another chapter in the fear story. Anyhow, it would be worth the pain to distance the UK from the dishonest EU bureaucrats.

John of Gloster    on 11 March 2019

"There's that word "could" again"

Well spotted Robert.. Tired of seeing the overkill use of the increasingly ubiquitous FAKE NEWS words like "could" .. "maybe" ... "if" ... and the rest to promote the FAKE NEWS slant in their scaremongering. No end to it.

FAKE NEWS Is alive and harmfully unwell in the UK.

Brian Sallows    on 11 March 2019

I have managed to own cars , since 1962, without buying French or German or Japanese cars.

Maybe my next one will be a Kia.



Edited by Brian Sallows on 11/03/2019 at 18:25

Karen's kars    on 11 March 2019

Political scaremongering handed down from the French EU ministers to peugeot top brass to their lacky in Britain.They dont want us to leave as it could create a flood.
French cars reliability is scary enough, the germans are not so good, shame Honda is leaving as we have 2,but who can blame them now the EU have stabbed us in the back and stole them from us. Up yours froggies.

BikerGSA    on 11 March 2019

I really like it when people say that the EU has stabbed us in the back, no mention of course of the UK dropping the EU in the s*** by leaving before making a deal or even establishing what we actually want out of Brexit let alone giving a damn about the consequences to EU industry.

If that wasn't bad enough we then make a negotiated deal much to our suggestion only then to change our minds and try and get something else and all because our Parliament is dominated by a minority ERG militant tendency in the Tory Party and their DUP associates plus an opposition that dithers from one month to the next.

The EU has the patience of a saint in trying and accommodate our shambolic government and their varied and often opposing whims, any other entity would have stuck two fingers up at us and walked away.

David Mullen    on 11 March 2019

All cars whether sourced from the EU or not will be subject to the 10% tariff under WTO rules and as for the £ it will drop if no deal comes to pass, that's been the case since the vote (15% down).

David Mullen    on 11 March 2019

Non EU cars will also be subject to a 10% tariff under WTO rules. As for the £ why did it fall by 10% the day after the referendum and continue to fall ever since?

4caster    on 12 March 2019

Wrong! The Government doesn't have to apply any tariff at all.

Richard Cull    on 11 March 2019

Wouldn’t buy one if the price dropped 20%

John of Gloster    on 11 March 2019

Lets hope this Peugeot scare and car vending pessimist is correct with his "could be" scenario. Us poor Brits would be forced to not only support home product, how sad for them and the UK Nation.... not. No more French and German stuff flooding the UK. Long overdue, but buy home product instead of the stuff from the EU mainland that currently flood our car parks and road system.

We have supported EU car manufacturers to a harmful excess for fr too long. Every BMW, Peugeot, VW et all purchased here in the UK helps our exports .... of UK jobs to the EU Mainland!.

If as the fear spreaders predict, the £1 falls against the $ and Euro, that will make our product much more competitively priced in the shark infested commercial World where for far too long, the UK has played its part fairly... as a minnow!

It has to stop.. The £ has not dropped much in the past three years despite what the fear mongers have said. These include our meejah who mostly voted IN, About 95% of the UK meejah luvvies still fail miserably to understand why so many millions of Brits, unlike them, voted OUT. The EU is not broken for them, it has been and continues to be harmfully broken for millions of the rest of us.

The mainland have much more to fear than the UK in the event of a No Deal. It is obviously in the Brussels Monster's interest to make things as difficult as possible for the UK to sever that parasitical umbilical cord from the hard working UK taxpayers supplying millions to the Brussels parasite. You do not need to be a Sir David Attenborough to appreciate that in all Nature, no parasite makes it easy for a sustaining host to cut free.

So, I shall have to cancel my now 20% dearer costly Porsche order and lump it and buy home product instead.. Oh woe is me and those poor folks in Stuttgart. Feel so sorry for them....Not!

More seriously, I used to trade internationally and exchange rates you needed to keep a close check on.... or else. Soon after June 23rd 2016, our "We're cleverer than you plebs" meejah came out with negativity FAKE NEWS slanted headlines such as "The pound has fallen against the dollar by the most in thirty years" or some such. . How very convenient. I clearly remember that the $-£ reached parity in the mid 1980s which they miserably failed to mention. That parity just over their convenient thirty year goal post alignment. In the spearhead of that FAKE NEWS slant vending then and continuing now... our once highly regarded and rightly so Guaranteed Revenue Stream Broadcasting Organ who are so good at paying themselves hugely from that guaranteed revenue stream. They are convinced they are so worth it... yeah right.

How b***** convenient not to mention that.....Ger-cha..

What's FAKE NEWS Dad? Never mind son, get on with your homework.

James and Susan Wareham    on 11 March 2019

If it's all going to be so bad no one will have any money to buy any car what ever the price.

Plodding Along    on 12 March 2019

Never thought I'd read so much crap in a thread on here.

Leaving the EU will be bad for Britain. Incresed car prices will be nothing compared to increased food prices in our half empty supermarkets.

Any right thinking person in this country is a remainer.

To say the EU have stabbed us in the back is ludicrous! We voted to leave and yet everyone wants to keep all the benefits of being in the EU. Typical arrogant British attitude.

I for one will be voting to remain when we have the 2nd referendum. It is the only sensible thing to do. Better together.

Robert McAuley    on 12 March 2019

Never thought I'd read so much crap in a thread on here. Leaving the EU will be bad for Britain. Incresed car prices will be nothing compared to increased food prices in our half empty supermarkets. Any right thinking person in this country is a remainer. To say the EU have stabbed us in the back is ludicrous! We voted to leave and yet everyone wants to keep all the benefits of being in the EU. Typical arrogant British attitude. I for one will be voting to remain when we have the 2nd referendum. It is the only sensible thing to do. Better together.

Your arrogance knows no bounds and it's people like you with no spine who are letting the UK down. Stand up, be an adult, and join the revolution against the bullying, unelected, overpaid bureaucrats of the EU. Have you ever studied the background of these ''hoods''? Try it!

4caster    on 12 March 2019

So the 17.4 million who voted to be released from the EU's suffocating rules, and its protectionist cartel and its so-called Court of Justice, are not right-thinking people! Methinks you are just an anti-democratic bad loser. To have a second referendum before the government has implemented the first one is the antithesis of democracy. In any case there would be a landslide victory for Leave. Freedom at last! In the latest opinion poll 44% want to leave without a deal, and only 30% want to remain.

4caster    on 12 March 2019

I don't think even this government would be so stupid as to put 20% import tariffs on cars or anything else. WTO tariffs are the maximum that can be charged. An independent WTO signatory can apply what tariffs it wishes, as long as it applies the same tariff to all countries with whom it does not have, or is not negotiating for, a trade agreement.
Zero is the best option, because tariffs are paid by consumers in the importing country, and why would the government want to clobber its own citizens?

aethelwulf    on 13 March 2019

I have never considered buying a Peugeot in 53 years of driving. I doubt I will either. But what I do have , for the last ten years, is a KIA. I can recommend them thoroughly although some dealers may be less truthful than others so get a good one. Use the KIA forum to check out before buying. No one knows exactly what will happen but market forces will dictate prices. If Korean cars became cheaper the EU ones would follow suit pretty quickly. The Germans would have to close factories if the UK stopped buying the German overpriced cars.

glyn scothern    on 16 March 2019

good news then It may stop europeans walking all over whats left of our industry ,a bit late though.

Andy Lane    7 days ago

Leaving the EU is dumb. Blaming the EU for the problems caused by right-wing governments in the UK also dumb.
Putin, Trump and the disaster capitalists of the ERG want Brexit. If you wanted a single reason not to vote for Brexit, Stephen Hawking thought it was a bad idea. I think I'll go with the planet's brightest bloke.

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