What a 'No Deal Brexit' could mean for vehicle finance in 2021
22 December 2020 | A Merrick | 4 min read
How might a no-deal Brexit change vehicle finance?
Four years ago, the United Kingdom voted in a referendum to leave the European Union. By the 1st January 2021, the UK will have exited the EU. With trade negotiations still taking place, the reality of a no-deal Brexit is setting in. How might this affect you? If you plan to finance a vehicle, then a no-deal Brexit is likely to impact car and van leasing prices. This is due to increased tariffs and taxes directly affecting the cost of new vehicles.
Even if the vehicle is manufactured in the UK, such as MINI cars in Oxford or Vauxhall Vivaro vans in Luton, prices could be increased. The UK factory is likely to rely on parts being imported from EU countries, which will then affect pricing. Furthermore, suppose the UK arrives at a no-deal Brexit on the 1st January 2021. In that case, World Trade Organisation (WTO) trade rules may be put in place to govern trade between the UK and EU. Currently, WTO rules mean a further 10% tax is added to new, complete vehicle imports. 10% may not sound much when it comes to inexpensive commodities. Still, we will notice the price increase if it comes to motor vehicles.
Here at Commercial Vehicle Contracts, we're working closely with dealerships and funders to provide our customers with up to date knowledge and the best finance options and prices. It should also be noted that in leaving the EU, the availability of different model ranges could be disrupted. As a result, we may see a delay in quoting as we wait for updated prices and lead times. However, we will continue to use our expertise and professional relationships to quote you on the best vehicle for your needs. Remember, manufacturers offer similar ranges, so we may be able to find an alternative car or LCV to suit you. So please give us a call on 01424 863 456 or contact us for free, expert advice if you are looking to source a new vehicle on finance in 2021.
In the meantime, we have been working with manufacturers, dealerships, and funders to find out what a no-deal Brexit means for existing orders. We are awaiting more information to unfold, but know that if vehicles have not passed custom checks by 1st January, then we may see the following:
- Benefit in Kind increase if the list price increases
- Price protection questions/concerns
- Fleet policies and benchmarks affected, if there are price increases
- Disruption to the delivery of new vehicles (meaning customers should consider extending their existing contracts to secure use of current vehicles in the interim)
We understand that this is an uncertain time which raises a lot of questions. We will continue working with our stakeholders as closely as possible to gather information to provide the best possible prices and experience for our customers. If you do have any questions, please do not hesitate to contact us.
