The cost of every new car sold in Britain could jump by £1,500 if tariffs are applied to foreign-built cars sold here after the country leaves the EU.
The stark warning on Brexit comes from trade body the Society of Motor Manufacturers and Traders (SMMT). It is lobbying to ensure the UK retains access to the single market once Article 50 is triggered.
How car tariffs could work post-Brexit
World Trade Organisation tariffs of 10% could be applied to new car sales unless a deal is struck with the EU nations.
SMMT chief executive Mike Hawes warned that the extra costs would inevitably be passed on to car buyers, damaging the UK’s buoyant vehicle market.
“The costs would be significant – a 10% tariff would add £2.7 billion to the total cost of cars sold,” he said. “That could lead to a significant fall in the car market.”
How does Brexit affect UK car buyers?
There is no need to panic today. The electorate voted in a June 2016 referendum to leave the EU, but Article 50 has yet to be triggered as ministers work out a negotiating strategy.
The SMMT’s warning looks at least two years into the future, so tariffs are a distant prospect. However, unless the UK strikes deals with trading partners, prices could rise from 2019 onwards.
Hawes also warned that British-built cars could be exposed to reciprocal tariffs adding a further £1.8bn burden, dealing a crushing blow to exports.
“How could we remain competitive with that level of cost?” he asked. “It could spell the end for our industry.”
