No deal Brexit likely - impact in car prices here?

Casati

With it looking increasingly possible we will have a no deal Brexit, do we know what impact this will have on cars being imported and likely impact on pricing

Presumably Vat Registered cars in UK will be sold at 0% VAT / export rate to outside UK, so most ex lease / ex demo stuff would still be available to import without paying VAT on the double as VAT will be liable upon import

I understand that duty is payable on cars imported to the EU, but I wonder is it payable if the car was originally manufactured in EU?

With less used cars likely imported you’d imagine used prices will be higher here so cost to change into new cars mightn’t be as high

3d4life

Lets park that and look from the view point of a Brit.

Say he has a European made car provided by work ( & maybe its thru a leasing Co )

When time comes to replace will sticker price have gone up due to UK import duties ? Maybe ? and if so then cost to replace will be ( significantly ? ) more than when in the single market. Would that in turn increase the value of secondhand cars in UK. Perhaps The Brits will introduce some form of duty rebate for exported secondhand cars ( like here ). Who knows !

Would that in turn suggest that secondhand cars imported from UK will increase in cost ?

Maybe not.

The economics of importing secondhand from Japan shouldn't change on foot of all of this.

Perhaps more units will come from Japan and fewer from UK ?

( I know nothing and I'm not in The Trade )

User1998

My prediction is that IF a hard brexit happens and VAT is charged on imports, then dealers across the country will have to buy from Japan instead and we will see lots of automatic petrol and hybrid cars from Japan being flooded into the market (Japan don’t really do manual or diesel cars). I’d hope there’s no hard brexit but it is a real possibility now.

Casati

3d4life wrote: »

Lets park that and look from the view point of a Brit.

Say he has a European made car provided by work ( & maybe its thru a leasing Co )

When time comes to replace will sticker price have gone up due to UK import duties ? Maybe ? and if so then cost to replace will be ( significantly ? ) more than when in the single market. Would that in turn increase the value of secondhand cars in UK. Perhaps The Brits will introduce some form of duty rebate for exported secondhand cars ( like here ). Who knows !

Would that in turn suggest that secondhand cars imported from UK will increase in cost ?

Maybe not.

The economics of importing secondhand from Japan shouldn't change on foot of all of this.

Perhaps more units will come from Japan and fewer from UK ?

( I know nothing and I'm not in The Trade )

Sounds like you are right with the duty piece - they plan a 10% duty on EU made cars

https://www.autocar.co.uk/car-news/industry/confirmed-10-import-tax-new-cars-european-union

Japanese imports might again be popular here but they must be expensive relative to UK imports or we would see more of them already - especially as we seem to be v keen on moving to automatic transmission and hybrids which are everywhere in Japan

ba_barabus

Its a safe bet that UK imports will go down further in quality to cover the added costs due to brexit

3d4life

Casati wrote: »

...they plan a 10% duty on EU made cars..

What cars are made in the UK at present ?

kanuseeme

Casati wrote: »

Sounds like you are right with the duty piece - they plan a 10% duty on EU made cars

https://www.autocar.co.uk/car-news/industry/confirmed-10-import-tax-new-cars-european-union

Japanese imports might again be popular here but they must be expensive relative to UK imports or we would see more of them already - especially as we seem to be v keen on moving to automatic transmission and hybrids which are everywhere in Japan

There is now a trade deal between Japan and the EU, which will lower the duty on cars imported and car parts over the next few years. I believe its 10% duty, and it will be slowly lowered over 8 years.

It is so much easier to bring cars in from the UK, even with duty and vat being reclaimed in the UK and then paid here when VRT'ing the car, it might still be easier than trying to understand Japanese auction sheets.

Atlantic Dawn

3d4life wrote: »

What cars are made in the UK at present ?

Not anything near what there used to be but off the top of my head...

Land Rover
Mini
Nissan Leaf, Qashqai
Honda Civic
Toyota Corolla

bazz26

Honda will be moving production of the Civic back to Japan when the current model goes end of sales life.

Casati

ba_barabus wrote: »

Its a safe bet that UK imports will go down further in quality to cover the added costs due to brexit

You mean the EU manufacturers will sell lower spec cars into the UK market to keep prices flat?

With the market there being large and obviously important for some makes like BMW/ Audi / Ford etc I guess it likely they will reduce prices of cars to keep sales high. In fairness a lot of European cars attract the 10% duty already eg Volvo’s made in China, Merc’s made in U.S, VW made in South Africa

ba_barabus

Casati wrote: »

You mean the EU manufacturers will sell lower spec cars into the UK market to keep prices flat?

With the market there being large and obviously important for some makes like BMW/ Audi / Ford etc I guess it likely they will reduce prices of cars to keep sales high. In fairness a lot of European cars attract the 10% duty already eg Volvo’s made in China, Merc’s made in U.S, VW made in South Africa

I'm more implying that some scrupulous used car dealers here will just import dregs from the UK to keep it financially viable to do so.

Marcusm

User1998 wrote: »

My prediction is that IF a hard brexit happens and VAT is charged on imports, then dealers across the country will have to buy from Japan instead and we will see lots of automatic petrol and hybrid cars from Japan being flooded into the market (Japan don’t really do manual or diesel cars). I’d hope there’s no hard brexit but it is a real possibility now.

A huge portion of the U.K. fleet is sold via finance and/or employer based deals which are generally VAT qualifying vehicles at the end of the initial 2-3 year cycle. This will mitigate a lot of the VAT issue but will restrict the ability of an Irish individual to access good deals. Such cars are generally sold via auctions which are often inaccessible. I rarely see car supermarkets such as CarGiant indicating “VAT qualifying” although my instinct says that a lot of their cars should satisfy this. Whether CarGiant is still in business in a few years is a different point as the site itself will be swallowed up in the Old Oak Comm

User1998

Marcusm wrote: »

A huge portion of the U.K. fleet is sold via finance and/or employer based deals which are generally VAT qualifying vehicles at the end of the initial 2-3 year cycle. This will mitigate a lot of the VAT issue but will restrict the ability of an Irish individual to access good deals. Such cars are generally sold via auctions which are often inaccessible. I rarely see car supermarkets such as CarGiant indicating “VAT qualifying” although my instinct says that a lot of their cars should satisfy this. Whether CarGiant is still in business in a few years is a different point as the site itself will be swallowed up in the Old Oak Comm

Yeah that’s true a lot of the 2-5 year old cars going through the auctions in the UK would be Vat Qualifying. A lot of them would have been leased as company cars. But it’s not just 5 year old and younger cars being imported, there’s still thousands of 5+ year old cars being imported too and VAT would completely wipe them out.

Tbh I never understood this whole vat qualifying thing, I’ve bought 10 year old cars and 3 year old ex lease cars and didn’t pay VAT on either of them?

Marcusm

User1998 wrote: »

Yeah that’s true a lot of the 2-5 year old cars going through the auctions in the UK would be Vat Qualifying. A lot of them would have been leased as company cars. But it’s not just 5 year old and younger cars being imported, there’s still thousands of 5+ year old cars being imported too and VAT would completely wipe them out.

Tbh I never understood this whole vat qualifying thing, I’ve bought 10 year old cars and 3 year old ex lease cars and didn’t pay VAT on either of them?

With many of the 5+ y/o cars, I think that NOx is making many of them marginal if not downright unattractive.

VAT qualifying simply means that all owners have been VAT registered and are thus entitled to recover and required to charge VAT on purchases/sales. Where the car passes through an unregistered person (generally a private individual) then this chain of ownership is broken and any subsequent dealer accounts for VAT on its margin on the deal rather than the total.

If there is no VAT deal as part of Brexit then the U.K. would be unlikely to allow any VAT reduction on non-VAT qualifying cars except to the extent of the margin. That the good has been subjective UKVAT while it was a member of the EU will be of no value and full Irish VaT would be payable. This is why VAT qualifying vehicles might be more attractive.

Casati

Marcusm wrote: »

With many of the 5+ y/o cars, I think that NOx is making many of them marginal if not downright unattractive.

VAT qualifying simply means that all owners have been VAT registered and are thus entitled to recover and required to charge VAT on purchases/sales. Where the car passes through an unregistered person (generally a private individual) then this chain of ownership is broken and any subsequent dealer accounts for VAT on its margin on the deal rather than the total.

If there is no VAT deal as part of Brexit then the U.K. would be unlikely to allow any VAT reduction on non-VAT qualifying cars except to the extent of the margin. That the good has been subjective UKVAT while it was a member of the EU will be of no value and full Irish VaT would be payable. This is why VAT qualifying vehicles might be more attractive.

Can privative individuals buy vat qualifying cars vat free for export when UK leave EU or just dealers?