UK motorists could be slapped with a 10% rise in annual car servicing costs if the UK can’t negotiate a deal with the European Union for Brexit.
A new report, called the Importance of the Aftermarket to the UK Economy 2017, shows that annual car service bills could rise by about £70 per person if the government fails to prevent the implementation of tariffs on imported goods.
The study, commissioned by the Society of Motor Manufacturers and Traders (SMMT), shows that since 80% of car parts sold in the UK aftermarket are imported, with more than three-quarters of them coming from Europe, that would equate to a national increase in costs of £2.14 billion.
The main trigger for such a rise would be a 2.5-4.5% World Trade Organization (WTO) tariff, which could be enforced if no free trade deal with the EU is made. The added costs passed on to motorists would be made up of £21 in annual servicing bills, as well as a further £49 per car resulting from quotas, subsidies, customs delays and regulatory barriers.
Along with an anticipated rise in inflation of £10, that would send average annual servicing costs up from £707 (2016) to £787 in the UK’s first post-Brexit year.
The SMMT warned of the negative impact this could have on the UK’s aftermarket car parts industry, which grew by 2.4% to contribute £21.6bn to the economy in 2016. If current trends continue, it is predicted to be worth £28bn and directly employ 400,000 people by 2022.
SMMT chief executive Mike Hawes said: “This report shows just how vital the UK automotive aftermarket is to our economy and society, supporting hundreds of thousands of jobs and keeping vehicles safe – and the country moving.
“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. Government must now prioritise an interim arrangement that maintains single market and customs union membership until the right trade deal with the EU is implemented.”
Brexit could also hinder the UK’s progress in car manufacturing. Output was previously predicted to rise from 1.6 million in 2016 to two million in 2020, but is now expected to slow in growth. The SMMT said uncertainty surrounding the UK’s role in Europe and the deal it can negotiate with the EU has hindered investment.
Some car manufacturers, including Mini and Bentley, have previously warned that they could shift production to Europe if the UK leaves the EU’s single market. However, Mini recently confirmed that production of the new electric model would be handled in Britain.