Could Brexit Make Your Car Repair More Expensive?

On 31st January, the UK will leave the European Union and enters the next stage to finalise Brexit. With 11 crucial months of trade talks ahead, we take a look at what Brexit means for UK drivers and the impact on the cost of repairing, maintaining and running a car.

The impact of Brexit on the cost of car repair

UK motorists could see a 10% rise in their annual repair and service bill once the UK leaves the EU single market. The collective car repair bill could rise by more than £2billion due to new tariffs.

This according to the Society of Motor Manufacturers and Traders (SMMT), assumes the UK will fall back into the World Trade Organisation (WTO) rules in a hard Brexit situation. The new research falls in line with many other industries predicting sharp inflation, due to higher import/export costs.

Mike Hawes, SMMT chief executive, said: “Our car maintenance sector is one of Europe’s most competitive, and motorists enjoy a great choice over where they have their cars serviced. However, if we don’t secure a new trading relationship with the EU that is free of tariffs and customs checks, British consumers could face significant increases to their annual car repair bill due to new tariffs and other trade barriers…If we don’t secure a new trading relationship with the EU that is free of tariffs and customs checks, British consumers could face significant increases to their annual car repair bill due to new tariffs and other trade barriers…The government must now prioritise an interim arrangement that maintains a single market and customs union membership until the right trade deal with the EU is implemented.”

In 2016, the UK automotive aftermarket sector grew by 2.4% in terms of turnover to £21.6 billion, creating an extra 1,400 jobs. The market now employs almost 350,000 people, more than the population of Coventry.

The amount and age of vehicles in the UK will only increase, as cars last longer than before. The UK automotive aftermarket sector is on track to grow to £28 billion, with 400,000 employees by 2022.

The SMMT’s report suggests that WTO tariffs will add between 2.5-4.5% onto car parts, adding an average of £21 to replacement parts. Quotas, subsidies, customs delays, and regulatory barriers could add an extra £49 for all these handling issues.

The UK government has signaled there will be a hard Brexit, with Prime Minister Theresa May suggesting “no deal is better than a bad deal” and “free movement will end in March 2019” which is a tenant to single market access. This presents the picture that the UK could fall back on the WTO rules, outside of the single market.

The SMMT stress the magnitude of the tariff problems with “80% of replacement car parts fitted to British cars are imported, with almost three-quarters of these coming from EU-based suppliers. However, the manufacture of components in the UK is growing, making the risk of tariffs on British products sold in Europe and other key global markets another major concern.”

The report finally suggested that WTO tariffs on parts exported from the UK could cost the industry £3 billion in lost revenue, “with a potential impact on future investment and jobs”.

The impact of Brexit on buying a used car

If as a result of failed negotiations on trade tariffs we will see new car prices going up (up to 10% on WTO terms), it is likely that used car prices will follow suit. The change in prices could mean that more people are putting off buying a new car, hang on to their car for longer or are opting to purchase a used car instead of a new one leading to more demand on the used car market.

The impact of Brexit on insuring a car

A rather overlooked issue, but currently drivers are covered by a ruling by the European Court of Justice which requests insurers to offer equal premiums for male and female drivers. Upon leaving the EU, this directive could be reviewed or abandoned by the UK government, meaning that insurers could charge different costs by gender with premiums for male drivers potentially going up. Another privilege that could be affected is the EU wider coverage for motorists. At the moment, the UK driver’s insurance covers them for driving across the EU. If this directive is abandoned as well, you might have to look into purchasing additional insurance should you plan to go on a road trip across the continent.

The impact of Brexit on running a car

A rather overlooked issue, but currently drivers are covered by a ruling by the European Court of Justice which requests insurers to offer equal premiums for male and female drivers. Upon leaving the EU, this directive could be reviewed or abandoned by the UK government, meaning that insurers could charge different costs by gender with premiums for male drivers potentially going up. Another privilege that could be affected is the EU wider coverage for motorists. At the moment, the UK driver’s insurance covers them for driving across the EU. If this directive is abandoned as well, you might have to look into purchasing additional insurance should you plan to go on a road trip across the continent.