Post Brexit trade deals & new cars
Discussion
I currently have an order in on a new car which is due to be delivered early next year. As things stand there is likely to be another 10% added to the price due to the additional EU tariffs.
I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
FuzzyLogic said:
I currently have an order in on a new car which is due to be delivered early next year. As things stand there is likely to be another 10% added to the price due to the additional EU tariffs.
I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
You'll have line of sight of whether there will be a FTA to seamlessly flow through from the transition period within a week or two. I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
FuzzyLogic said:
I currently have an order in on a new car which is due to be delivered early next year. As things stand there is likely to be another 10% added to the price due to the additional EU tariffs.
I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
What EU tariffs are you referring to?I can cancel almost all the way up to Christmas with no financial impact.
My question is - what is to stop a deal being done with the EU 3 / 6 / 9 months after we leave at the end of the year?
what I don’t want to do is pay the extra 10% early next year and then 6months later a deal is done and the extra new car tariff disappears meaning I’ve overpaid by 10%
In my case the 10% is around £7k so It’s not insignificant. Thoughts?
Sway said:
You'll have line of sight of whether there will be a FTA to seamlessly flow through from the transition period within a week or two.
If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
Is it landed including the VAT of excluding? If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
I can see this really screwing up motor sector for 6 months or a year or so, I wonder whether the chancellor with offer a temp VAT reduction on imported cars, from orders made prior to the year end? Drop that to 10% say for orders made in 2020 but delivered in 2021?
Otherwise, surely everyone will just be cancelling orders and waiting to see what happens? .
poo at Paul's said:
Sway said:
You'll have line of sight of whether there will be a FTA to seamlessly flow through from the transition period within a week or two.
If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
Is it landed including the VAT of excluding? If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
I can see this really screwing up motor sector for 6 months or a year or so, I wonder whether the chancellor with offer a temp VAT reduction on imported cars, from orders made prior to the year end? Drop that to 10% say for orders made in 2020 but delivered in 2021?
Otherwise, surely everyone will just be cancelling orders and waiting to see what happens? .
Irrelevant though, as the VAT is reclaimed by the dealer.
Stay in Bed Instead said:
What EU tariffs are you referring to?
All the car makers are anticipating there may be tariffs which could add 10% on to the price of cars, he hasn't made this up, this is something dealers, brokers, etc are being forewarned about. https://www.which.co.uk/news/2020/10/car-prices-af...
Edited by Oakey on Friday 13th November 11:07
Sway said:
Duty is applied before VAT. VAT is levied on landed price plus duty.
Irrelevant though, as the VAT is reclaimed by the dealer.
But still paid for by the purchaser. So to all intents and purposes, this will be a 10% hike on the cost price, (not retail), ie paid price less dealers margin. Irrelevant though, as the VAT is reclaimed by the dealer.
Assuming OPs car is 65k say, I reckon it could still be £5.5k to £6k extra.
Oakey said:
Stay in Bed Instead said:
What EU tariffs are you referring to?
All the car makers are anticipating there may be tariffs which could add 10% on to the price of cars, he hasn't made this up, this is something dealers, brokers, etc are being forewarned about. They're not "EU tariffs" - they are UK tariffs on all imports without a FTA. It's just that there is a potential for imports from the EU to move from tariff free to duty attracting.
As I've mentioned - if dealers are saying prices need to go up by ten percent due to tariffs - they're profiteering and lying.
As the duty is on landed value, not sales price.
Sway said:
poo at Paul's said:
Sway said:
You'll have line of sight of whether there will be a FTA to seamlessly flow through from the transition period within a week or two.
If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
Is it landed including the VAT of excluding? If it isn't agreed - then there's absolutely nothing stopping continuing negotiations to sign one after the end of the transition. Impossible to say what sort of time line that could take - could be weeks, could be years.
Oh, and the tariff is not on the sales price - it is on the landed price at import. So you should absolutely not be expecting a 10% price increase to you as the consumer.
I can see this really screwing up motor sector for 6 months or a year or so, I wonder whether the chancellor with offer a temp VAT reduction on imported cars, from orders made prior to the year end? Drop that to 10% say for orders made in 2020 but delivered in 2021?
Otherwise, surely everyone will just be cancelling orders and waiting to see what happens? .
Irrelevant though, as the VAT is reclaimed by the dealer.
The cost price has gone up 10%. Any dealer trying to add 10% to the sale price is taking the piss. They are, in effect adding extra margin over that which they would previously have made.
poo at Paul's said:
Stay in Bed Instead said:
What EU tariffs are you referring to?
Import tariffs on new private vehicles like cars and campervans from EU, under WTO will be 10%. So we set the tariff and collect it. Assuming we choose to apply it. We could set it at zero.
Edited by monkfish1 on Friday 13th November 11:13
monkfish1 said:
This ^^^
The cost price has gone up 10%. Any dealer trying to add 10% to the sale price is taking the piss. They are, in effect adding extra margin over that which they would previously have made.
I also wonder how many of them dropped their prices as a direct result of the currency shift a few years ago...The cost price has gone up 10%. Any dealer trying to add 10% to the sale price is taking the piss. They are, in effect adding extra margin over that which they would previously have made.
poo at Paul's said:
Sway said:
Duty is applied before VAT. VAT is levied on landed price plus duty.
Irrelevant though, as the VAT is reclaimed by the dealer.
But still paid for by the purchaser. So to all intents and purposes, this will be a 10% hike on the cost price, (not retail), ie paid price less dealers margin. Irrelevant though, as the VAT is reclaimed by the dealer.
Assuming OPs car is 65k say, I reckon it could still be £5.5k to £6k extra.
So, on a £50k car you'd deduct the £10k VAT.
Then, deduct margin and intra UK transport. Potentially deduct UK OEM margin (if any) - the duty is paid on that deducted value.
So on that £50k I'd suggest anything more than £3.5k is taking the piss and relying on consumer ignorance.
Sway said:
No, as you're ignoring VAT.
So, on a £50k car you'd deduct the £10k VAT.
Then, deduct margin and intra UK transport. Potentially deduct UK OEM margin (if any) - the duty is paid on that deducted value.
So on that £50k I'd suggest anything more than £3.5k is taking the piss and relying on consumer ignorance.
It depends what margin you are assuming is on the car, they are notoriously low on mainstream stuff, genuinely, on a £20k new car, it will be less than a grand for mainstream stuff. Higher of course for less mainstream stuff. So, on a £50k car you'd deduct the £10k VAT.
Then, deduct margin and intra UK transport. Potentially deduct UK OEM margin (if any) - the duty is paid on that deducted value.
So on that £50k I'd suggest anything more than £3.5k is taking the piss and relying on consumer ignorance.
My point about VAT is that if the import duty is applied at 10%, the VAT is then applied to that landed cost, plus the 10%, so the VAT amount increases by 10%. Dealer pays VAT on his "margin" effectively, ie reclaims purchase vat vs the sales VAT, As far as i see it, the 10% will be based on the "cost" price to the dealer, ie retail price less his margin.
I agree with you, if hsi car is 70k to him, it wont be 7k, but it may be 5.5k..
Which? suggest an average of 10% on new run-of-the-mill cars from the EU. We have a trading deal with Japan and, the theory is, the cars imported from there will not be loaded. However, the EU will want to sell cars in the UK and so will be forced to drop prices, but Japan, which is, evidently, cutting margins to sell in the UK, will probably increase theirs a bit.
On top of all that, I was reading that the pound is artificially low at the moment due to the uncertainty of deal/no deal. Certainly the FTSE is lower than it should be for that reason. Whichever way it goes, once we know the outcome of EU negotiations, the FTSE will rise significantly, although maybe less so with a hard brexit. The pound is likely to follow suit, at least that's what the suggestion is, with a deal with the EU, less so with a hard brexit.
In other words, nobody knows as there are too many variables. Anyone who tells you otherwise is either on something or selling it.
My bet is, as it was, that we'll sell fishing down the river to get a deal. We'll bow to American standards of food prep, and, shamefully, their standards, or lack of them, with regards labelling, or lack of. I've seen nothing to dissuade me from that prediction in the last year, but nothing to support it either.
The thing with cars is that you can easily vary what, how and when you buy in order to ensure costs don't rise. With much of the other stuff, it's likely to be more difficult.
On top of all that, I was reading that the pound is artificially low at the moment due to the uncertainty of deal/no deal. Certainly the FTSE is lower than it should be for that reason. Whichever way it goes, once we know the outcome of EU negotiations, the FTSE will rise significantly, although maybe less so with a hard brexit. The pound is likely to follow suit, at least that's what the suggestion is, with a deal with the EU, less so with a hard brexit.
In other words, nobody knows as there are too many variables. Anyone who tells you otherwise is either on something or selling it.
My bet is, as it was, that we'll sell fishing down the river to get a deal. We'll bow to American standards of food prep, and, shamefully, their standards, or lack of them, with regards labelling, or lack of. I've seen nothing to dissuade me from that prediction in the last year, but nothing to support it either.
The thing with cars is that you can easily vary what, how and when you buy in order to ensure costs don't rise. With much of the other stuff, it's likely to be more difficult.
poo at Paul's said:
Sway said:
No, as you're ignoring VAT.
So, on a £50k car you'd deduct the £10k VAT.
Then, deduct margin and intra UK transport. Potentially deduct UK OEM margin (if any) - the duty is paid on that deducted value.
So on that £50k I'd suggest anything more than £3.5k is taking the piss and relying on consumer ignorance.
It depends what margin you are assuming is on the car, they are notoriously low on mainstream stuff, genuinely, on a £20k new car, it will be less than a grand for mainstream stuff. Higher of course for less mainstream stuff. So, on a £50k car you'd deduct the £10k VAT.
Then, deduct margin and intra UK transport. Potentially deduct UK OEM margin (if any) - the duty is paid on that deducted value.
So on that £50k I'd suggest anything more than £3.5k is taking the piss and relying on consumer ignorance.
My point about VAT is that if the import duty is applied at 10%, the VAT is then applied to that landed cost, plus the 10%, so the VAT amount increases by 10%. Dealer pays VAT on his "margin" effectively, ie reclaims purchase vat vs the sales VAT, As far as i see it, the 10% will be based on the "cost" price to the dealer, ie retail price less his margin.
I agree with you, if hsi car is 70k to him, it wont be 7k, but it may be 5.5k..
On a £70k car, the actual price is £56k plus VAT. If the duty were £5.5k, then the entire chain of haulage to dealer/registration/UK HQ margin/dealer margin/PDI/etc. is less than £1k.
That's just not true.
You talk of £1k margin on a £20k car - that's 5-6% dealer margin. Not that slim.
On a £70k car - if the "duty price increase" were more than £4k I'd be seriously questioning the dealer's morals and honesty.
poo at Paul's said:
It depends what margin you are assuming is on the car, they are notoriously low on mainstream stuff, genuinely, on a £20k new car, it will be less than a grand for mainstream stuff. Higher of course for less mainstream stuff.
Are you sure? I just wrangled 3k off a very mainstream 20k new VW.The price is going up 2k after December.
poo at Paul's said:
It depends what margin you are assuming is on the car, they are notoriously low on mainstream stuff, genuinely, on a £20k new car, it will be less than a grand for mainstream stuff. Higher of course for less mainstream stuff.
My point about VAT is that if the import duty is applied at 10%, the VAT is then applied to that landed cost, plus the 10%, so the VAT amount increases by 10%. Dealer pays VAT on his "margin" effectively, ie reclaims purchase vat vs the sales VAT, As far as i see it, the 10% will be based on the "cost" price to the dealer, ie retail price less his margin.
I agree with you, if hsi car is 70k to him, it wont be 7k, but it may be 5.5k..
If I understand you right, using random figures...My point about VAT is that if the import duty is applied at 10%, the VAT is then applied to that landed cost, plus the 10%, so the VAT amount increases by 10%. Dealer pays VAT on his "margin" effectively, ie reclaims purchase vat vs the sales VAT, As far as i see it, the 10% will be based on the "cost" price to the dealer, ie retail price less his margin.
I agree with you, if hsi car is 70k to him, it wont be 7k, but it may be 5.5k..
With Tariff:
Cost price of car = £50k
Import duty = £5k
Dealer margin = £1k
VAT = £11.2k (Cost + duty+profit)
Total price = £67.2
without Tariff:
Cost = £50k
Dealer =£1k
VAT= £10.2k
Price = £61.2k
Difference = £6k
Or is my maths bad?
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