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Exchange rates could see PCP repayment hikes

Rupert Pontin

Glass’s has predicted that the falling value of the pound is likely to see monthly PCP new car payments rise in 2017 as manufacturers look to recoup their losses.

The vehicle data specialist says that manufacturers importing their vehicles into the UK will need to recoup margins somewhere and that PCP payments are the least unpalatable choice.

Rupert Pontin, director of valuations, said: “The pound fell in value by about 20% against the euro following the Brexit referendum and has not really recovered to any great extent, nor is there any reason to think that it will do so in the medium term.

 “This places considerable pressure on the profit margins being seen by many manufacturers who import cars from Europe into the UK. While they will probably be hedged for a certain period of time, the exchange rate shift will start to bite at some point soon.”

Pontin said that manufacturers would consider increasing the list price of cars or charging dealers more for vehicles to recoup the lost cash, but added that the most likely outcome was that subsidised PCP payments would be targetted.

He said: “This will impact on deposits, monthly payments, interest rates and even the lengths of the PCPs themselves.”

Pontin said that he expects these increases to only have a small negative effect on the new market in 2017 and Glass’s maintain a reasonably optimistic outlook, with the new car market set to drop by around 3.5% to a level of around 2.6 million cars.

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  • Stephen - 30/11/2016 13:14

    I think 'Hikes' is a bit of a strong word (obviously on purpose)