The cost of buying a new car in the UK could increase by as much as £2,300 as a result of a ‘hard Brexit’.
According to research published by PA Consulting this week, Britain opting for a World Trade Organisation regime (hard Brexit) after leaving the EU would lead to the introduction of a 10% tariff on cars - and a 4.5% tariff on their components.
PA Consulting said that should manufacturers choose to pass this additional cost on to customers the price of a new vehicle could soar by as much as £2,372 per car. This would be the scenario if all the stages of production were taken into account, said the management consultancy.
EU exports account for around 58% of cars sold in the UK and that a hard Brexit would therefore be “the worst-case scenario” for manufacturers.
“Any change in tariffs and regulations will immediately impact the automotive supply chain and make sourcing of assembly parts and distribution of finished vehicles more costly, forcing organisations to rethink their medium to long-term strategies,” the research said.
“Although the final position is still unknown, what is without question is that the automotive industry must assess the impact, generate options and be prepared.”
Tuesday’s study by PA Consulting also shows that European based manufacturing companies would likely face additional costs for exporting to the UK from mainland Europe under a hard Brexit.
> PA Consulting report: Brexit: The impact on automotive manufacturing in the UK
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