UPDATE 15 Jan 2021: The trade deal the UK agreed with the EU prevented the price rises expected from many car brands (as we outlined below) had a deal not been agreed. The deal enables tariff-free trade on cars and parts across the UK-EU border, by allowing EU-sourced parts to be considered local produce for UK-made cars exported to the EU.
Cars need to be made with at least 55% local content to avoid tariffs. Exemptions for electric vehicles protect prices until 2026, allowing time for local sourcing of parts to be increased: electric vehicles and hybrids will need 40% local content to avoid tariffs until 2023, and 45% local content until 2026. END UPDATE.
Car buyers should complete their purchases soon to avoid the risk of price rises from a no-deal Brexit outcome, Which? has learned. Find out what impact car manufacturers say a no-deal Brexit will have on them and what it could mean for you.
Car manufacturers are announcing their plans in the event the UK leaves the EU without a deal at the end of the Brexit transition period on 31 December. Any additional costs in manufacturing and importing cars risks price rises for car buyers.
Manufacturers, including Ford, Mercedes-Benz, Peugeot and Vauxhall have confirmed the prices of their cars will rise in the event of a no-deal Brexit, with others saying it would lead them to review their prices.
Some manufacturers have told Which? that they're committed to honouring the price of cars bought before the end of the transition period, but which are delivered after that date. The approach varies from manufacturer to manufacturer.
Find out below how much extra you could pay, plus what key car manufacturers have told us.
Around 70% of cars registered in the UK are currently imported from the EU. At the moment there are no tariffs on cars imported from the EU because the UK is following EU trade rules until the transition period ends on 31 December.
If the UK leaves the EU without a trade agreement, in line with World Trade Organization (WTO) rules, after this date a 10% tariff will apply to finished cars imported from the EU.
If a manufacturer passed on the full 10% import tariff, that would then lead to a 6.3% increase in the price you pay for a car (based on average prices and according to industry body the Society of Motor Manufacturers and Traders).
This is because import tariffs are levied on the customs price of a vehicle at the time of import, rather than the final price of sale. When a vehicle is sold in the UK, it will have additional taxes such as VAT and Vehicle Excise Duty added to it. Costs can also be impacted by changes in vehicle demand.
In the table below, we've added this 6.3% increase to the purchase price of the top five bestselling UK cars to see how much prices could rise in the event of a no-deal Brexit.
|Model||Purchase price||Price with WTO tariff applied||Increase in cost|
|Ford Fiesta (2017-)||£16,640||£17,688.32||£1,048.32|
|Ford Focus (2018-)||£22,210||£23,609.23||£1,399.23|
|Vauxhall Corsa (2020-)||£16,415||£17,449.15||£1,034.15|
|Volkswagen Golf (2020-)||£21,145||£22,477.14||£1,332.14|
|Mercedes Benz A-class (2018-)||£23,755||£25,251.57||£1,496.57|
An industry insider told us overall car costs would rise by around £1,800, on average, if a 10% tariff is introduced.
Ford has confirmed to Which? it will price-protect orders placed prior to leaving the transition period without a deal.
Ford of Britain managing director Andy Barratt said: 'In a no-deal scenario and the imposition of a WTO 10% tariff regime on new vehicles, prices for Ford's most popular passenger and commercial vehicles would rise by between £1,000 and £2,000.
Ford said: 'We will provide more details if or when the situation dictates.'
Ford of Europe communications executive director, John Gardiner, also said: 'We continue to hope that all sides can reach an agreement to ensure the UK leaves the EU with a deal in an orderly manner.'
Adding that despite taking actions to mitigate the impact of not having a deal, it's 'impossible to avoid disruption in such a scenario'.
Any price rises will occur on the date these additional duties are applied. So if you want to avoid paying this, what is key is the location of your new car at that moment - whether it's in the UK or a model being imported and still on the other side of the Channel.
Vauxhall, Peugeot, Citroen and DS say: 'Sold cars that are physically in the UK prior to the imposition of additional duties will be price protected. Prices for sold vehicles that are not yet in the UK at that date may be subject to a price increase due to any introduction of import tariffs.'
The brands confirmed this also applies to Vauxhall, Peugeot and Citroen vans as well.
Mercedes-Benz said: 'Should a government tariff become applicable at the end of the year, Mercedes-Benz will increase the price of its cars in line with that tariff.'
The car brand also said it has plans in place to help manage 'all relevant topics', including potential disruption to the supply and movement of goods, customs procedures and logistics.
Mercedes-Benz said it's 'monitoring the status of negotiations' between the UK and EU, and has the 'clear objective of ensuring that goods can continue to enter and exit the UK in a timely manner'.
However, it did provide encouraging information in the event of potential disruption to new car stock following the end of the Brexit transition period on the last day of 2020. Mercedes-Benz told us: 'We expect stock availability across the range of our cars to continue after 31 December 2020.'
Since it's not based primarily in the UK or EU, Honda has different considerations to contend with than many other manufacturers. Honda imports lots of its models from Japan and the US, so the usual 10% World Trade Organization tariffs have already been applied on cars imported into the UK from outside the EU.
Honda received some positive news recently with the signing of the UK trade deal with Japan. The 11 September 2020 deal still needs approval by Japan's parliament, which the country's Foreign Minister Toshimitsu Motegi forecast would be passed by January.
The deal would solve a potential difficulty for Honda and Nissan, who were set to enjoy tariff reductions to the EU from the new EU-Japan Trade Agreement. But with Brexit that deal no longer applies to their UK manufacturing operations.
Regarding the UK deal with Japan, Honda says: 'The draft text reflects a number of Honda's requests in relation to tariffs, regulation and services' and that it will 'benefit UK consumers by supporting competition and innovation', which could help boost Honda's competitiveness in the UK.
Honda UK's models are currently a mix of imports and UK production. Here's where its cars are coming from:
Even without the impact of tariffs, Honda has warned that there 'could potentially be an impact on our pricing'. This is since any implementation of new border controls could make importing cars and parts 'more challenging, time consuming and costly'.
Honda said that it's 'putting preparations in place to minimise the impact to our customers, retail network and investors, but not everything is in our control'.
The Honda e is a brand new all-electric car with a fancy, five touchscreen dashboard and apps that include a digital fishtank. So what's it like to drive and should you consider buying it? See our first look .
The end of the Brexit transition period looks like it will matter little to buyers. Since Mazda imports all its cars from Japan, it told us: 'The UK/EU negotiations will have little direct bearing on our vehicle pricing.'
Instead, like Honda, the Japan-UK trader agreement is the more important consideration. While the deal has been agreed in principle by the UK and Japanese governments, the precise details haven't yet been announced. When these are forthcoming, Mazda says: 'We will then be able to determine if any pricing adjustments need to be made.'
Even so, there is still the possibility disruption of imports at the UK border at the end of the transition period could have an impact on the delivery of their cars. Mazda told us: 'We are taking steps to minimise any delays to customer deliveries, however it's difficult to evaluate what the exact situation will be immediately after the end of the transition period.'
and its sister brands , and say they 'may need to adjust car prices to reflect any imposed new vehicle import tariffs or in line with market conditions', and that they 'continue to monitor closely all developments that may affect our operations and prepare to take appropriate action'.
The brands import a lot of their vehicles from the continent. We were told that, in response to the risk of delivery delays from any possible border disruption at the end of the Brexit transition period, they are 'focused on making the necessary preparations to ensure continuity of operations'.
Nissan, which has a strategic partnership alongside and , didn't respond in time to our request to comment for this article, but has previously warned that a no-deal Brexit could make its European business model unsustainable.
It said a 10% export tariff applied from a no-deal exit from the EU would put its entire European operations 'in jeopardy'.
The new-generation Nissan Juke, designed and manufactured in the UK, is specifically targeted at European markets. Two thirds of its components come from the EU and 70% of production is destined for the continent.
BMW said at the time: 'We will be able to give more information when the situation regarding the final outcome of the current UK-EU negotiations and its implications for our business and our customers becomes clearer.'
Since then, BMW Group has updated us and said that if there isn't a deal, WTO tariffs will apply from 1 January 2021. As a result of this, it would make 'some price adjustments' for cars imported into the UK and for Minis exported.
A spokesperson for BMW Group said: 'As we and many other automotive manufacturers have said previously, the absence of a workable and frictionless trade deal would be damaging for our industry. We would urge both sides to continue to work towards a zero tariff agreement that benefits the UK, the EU and our customers.'
(Updated 21 December 2020)
and said it's too early for them to reveal the details of their contingency planning - they are still working through their plans in case tariffs are applied after the end of the Brexit transition period.
They said they are 'working with government' to secure a deal that that will support consumers and their operations, which are largely based in the UK.
If you're buying your car ahead of the 31 December transition period deadline, your dealer should know whether it's available from stock or requires a factory order.
If your car's not yet in the UK, make sure you explicitly ask whether it will physically be in the country ahead of the 31 December.
After 31 December, if there's a no-deal Brexit, prepare yourself for a delay before you can get your hands on your shiny new car. Should border controls change, vehicles being imported from abroad could suffer delivery delays.
Manufacturers will have contingency measures to mitigate this impact, but not everything can be planned for.
Even if a deal is reached, this doesn't necessarily mean prices won't rise, as it would depend on the details of the deal. So complete your new car purchase soon if you want to minimise what you pay.
When manufacturers say they will protect their car prices, they mean the prices they recommend to the dealers that sell their cars. Dealers can set their own prices and deviate from these recommendations.
So if you find prices at your local dealer have risen despite a manufacturer committing to protect prices, make sure you shop around to look for another dealer that hasn't raised prices.
A car manufacturer's offer of price protection is always subject to manufacturer terms and conditions. So it's important you ask about these to make sure you meet them when purchasing your car.
Its chief executive, Mike Hawes, said: 'We are calling for an ambitious deal with the EU that guarantees zero tariffs and quotas, and avoids other barriers to trade.
'Such a deal would help maintain choice and affordability for drivers - and would also support our iconic automotive manufacturing industry in retaining its global competitiveness, protecting jobs across the country.'
UK car sales have been under pressure for some time due to Brexit uncertainty and other factors, but have taken a further big hit this year due to the coronavirus pandemic, as the graph below shows.
April 2020, at the height of lockdown, saw the worst car sales since February 1946, according to the SMMT's car registrations data, at only 4,321 cars for the entire month.
Between March and June, there was a 58.6% decline in new car registrations compared with the same period in 2019 - a drop of more than 600,000 cars, according to SMMT data.
Showrooms were shut between March and July, so there were very few ways to buy a car during lockdown. With more than a quarter of the country on furlough at one point, as well as people being made redundant and working reduced hours, far fewer consumers will have been able to invest in a new car.
The only month where car registrations were narrowly higher than last year is July, due to pent-up demand as lockdown restrictions were eased across the nation.
European industry body ACEA estimated that 3.6m car and van sales have been lost so far across Europe due to coronavirus.
The SMMT warns that ending the transition period without a deal could cause further severe damage. It says a no-deal Brexit which would lead to the imposition of a 10% tariff could wipe out three million cars and vans being built in the UK and EU over the next five years.
The ACEA warns that a no-deal Brexit would mean the industry being 'hit hard by a double whammy', with the SMMT and partner organisations across Europe calling for a Brexit deal with frictionless trade as well as targeted support for the industry.
The specific details on the deal between the UK and EU are also crucial. As part of a typical trade deal, car manufacturers need to prove a car is made from a sufficient amount of local content to avoid tariffs, according to WTO 'rules of origin'.
Up until now, UK-made cars were considered to be made entirely in the EU.
That changes when the transition period ends. In the case of a no-deal, tariffs will automatically apply to components and finished cars. Therefore, manufacturers would need to go through each and every component to determine its origin - something many have never had to do before, as they have always traded within the EU.
An industry insider told us that sourcing every component from the UK is simply not viable on the grounds of availability and cost.
This also poses a particular issue for both the UK and EU on . Electric vehicles' batteries often use rare metals usually not found in the UK or Europe. This means UK or EU-made electric vehicles will struggle even more than a petrol or diesel model to meet the agreed WTO threshold for locally produced content.
This will result in a 10% tariff and buyers potentially paying a premium for a zero-emissions vehicle, compared with one with a traditional combustion engine.
The SMMT and partner organisations across Europe are calling for any deal to have an exemption for rules of origin applying to electric vehicles, as well as consistent regulations to avoid extra paperwork and tests.
It adds that carmakers need 'targeted support and an appropriate a phase-in period that allows for greater use of foreign materials for a limited period of time, will ensure businesses are able to cope with the end of the transition period'.
(Originally published on 2 October 2020. Updated 21 December 2020 to include a response from BMW Group. Updated 15 January 2021 to include details of the UK-EU trade deal that has avoided a no-deal outcome.)