Cap HPI readies for car pricing shifts under no-deal Brexit
Cap HPI is preparing to handle large volume shifts in pricing from manufacturers that could arise from a no-deal Brexit.
Last month saw both the SMMT and BVRLA warn of how the enforcement of tariffs from 1 January 2021 under a no-deal Brexit could impact new car pricing; analysis for the SMMT has revealed a 10% WTO tariff would bring an average hike of £1,900 per EU-built vehicle sold in the UK, rising to £2,800 for fully electric cars. And the BVRLA has said it will add £2.1bn to the fleet sector’s annual new car bill.
Now, Cap HPI has reassured that it’s ready to handle any shifts in pricing and said it’s working closely with vehicle manufacturers on a wide range of scenarios relating to the potential charges.
Any pricing changes will be made visible as early as the manufacturer allows, but most likely from 1 January 2021 and on a model-by-model basis, ensuring fleets can continue to price vehicles accurately and easily.
Andrew Mee, head of forecast UK, added that Cap HPI would not alter future value forecasts until it was known for certain that tariffs were being introduced, how long they might last for, and post-Brexit economic forecasts were updated, so that the company could fully assess the broader picture.
However, he did advise that there is no evidence yet that Brexit concerns are having a negative effect on used car values.
“An outcome that sees tariffs on new cars may result in a reduction in new cars sales, which would be good news for used values. In the short term, higher new car prices may pull up some used prices, especially for newer cars. However, used values are still likely to fall during 2021 as the negative impact of coronavirus on consumer confidence (which could be worsened if Brexit has further negative impact on GDP and unemployment) is likely to outweigh the positive impact of higher new prices.
“In the longer term, say from three years into the future, the reduction in used supply should help lift used values, which by then we expect will have recovered from the coronavirus impact,” Mee emphasised.