A report released by the UK government shows it expected a 10% rise in the prices of cars for consumers in the event of a no-deal Brexit.

The no-deal Brexit impact assessment, titled ‘Implications for business and trade of a No Deal Exit on 29 March 2019’, noted that the UK automotive industry is “highly export
intensive.”

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On the issue of tariffs, the report stated: “This would be 10% on finished vehicles, and around 2.5 – 4% on components. Although wider macroeconomic effects will influence how the sector is affected, low operating margins may mean that in many cases extra costs could be likely to be passed on to consumers at the showroom.”

In 2018, 81.5% of UK vehicle production (1.24m vehicles) was exported, and 42.8% of UK vehicle production was exported to countries in the European Union.

The report also made clear the automotive industry’s ‘just in time’ model of manufacturing would become unfeasible due to the extra import and export delays at the border.

In its concluding statements, the report said: “The short time remaining before 29 March 2019 does not allow overnment to unilaterally mitigate the effects of no deal. Even where it can take unilateral action, the lack of preparation by businesses and individuals is likely to add to the disruption experienced in a no deal scenario.”

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The publication of the impact assessment followed follows a proposed amendment tabled in January by MP Anna Soubry and backed by MP Chuka Umunna, both now members of the newly formed Independent Group.

Last September the National Audit Office (NAO) reported on the Department For Transport’s (DfT) readiness for Britain leaving the European Union in March 2019, concluding it was deficient in its preparations for a ‘no-deal’ scenario.

In the event of a ‘no-deal’ Brexit, those driving vehicles into the European Union would need to apply for an International Driving Permit. Currently the Post Office issues 100,000 IDPs every year from 89 Post Office Branches. The Department estimates this could expand to 4,500 post offices issuing anything up to 7 million IDPs every year. The cost of the permit is currently £5.50, though the report does not specify what the future set fee will be.

VW has moved to prepare its dealer network for an increase in pricing to VW, Skoda and Seat cars and finance leases should there be a no-deal Brexit, Motor Finance learned this month.