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BREXIT: What does it mean for motorists?

Image source: smmt.co.uk

UK’s fastest growing car industry has increased momentum thanks to cheaper raw materials that reduces the costs of manufacturing, lower insurance premiums and the financial support from car leasing that gives motorists an affordable option to own a brand new vehicle.

A possible Brexit raises concerns whether the industry can continue at the same rate, irrespective of whether Britain is to remain or leave the E.U. In this article we will look at the 3 main factors which influence the motorists in U.K. and the effect on personal car leasing prices if the public vote for a Brexit in the E.U. referendum on 23rd June 2016.

2

Finance

The single most influential factor on any type of leasing is the availability of finance and the interest rates that make it affordable to the mass market. Although the Bank of England have not released any indication of how their interest rates would be affected there are however a large number of E.U. banks that offer finance to dealerships and brokers.

There could be a possibility that a Brexit will have an effect on how E.U. finance is regulated to U.K. applicants.  One particular area to consider is what changes if any will be made on how European car manufacturers like Mercedes-Benz who internally finance their corporate lease cars through MBFS stipulate their lending criteria to U.K. businesses.

Car manufacturing

There are number of car plants here in the U.K. and many of them rely on cheaper material trade deals from the E.U. to reduce the cost of manufacturing vehicles which directly affect the retail value and the discounts that can be passed down to the public.

Many of the engineers and factory operators are E.U. citizens and there’s an uncertainty in how this will affect workforces and the cost of operating manufacturing plants.

If the cost of manufacturing increases due to increased cost of materials and higher paid workforce then the retail cost increases which means leasing costs rise making it more expensive to drive a brand new car. This can have a knock on affect if there’s a deficit of cars not being sold.This may not affect manufacturers like Nissan and Toyota who are openly investing further and not worried about Britain going either way but it could affect others such as BMW mini which is a German-Britain collaboration.

Insurance premium

It is a very less known fact that the reduction of insurance premium was partially influenced by the E.U. intervention. The European court of justice in 2012 ruled that insurance premiums could not be calculated based on the gender of the policy holder.

Although this intervention marginally increased the premium for females but it also lowered the costs for males which could be seen as a balanced and impartial ruling.

On the other hand it’s worth noting that the insurance premium tax was raised based on it being in line with other E.U. countries which may or may not be affected by a Brexit.

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Posted on 28th April 2016 at 11:36 AM

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