New Car... will the price increase due to Brexit?

Soldato
Joined
13 Jul 2005
Posts
19,205
Location
Norfolk, South Scotland
I dont see how any of this is relevant though - I dont disagree there is probably a target of 50% margin between cost of goods and list price. But from that 50% margin has to come quite a lot else including allowance for discounts etc. 50% margin or no 50% margin if you can get 30% off list today with a tariff of nil you won't be getting 30% off list with a tariff of 10%.

If there is suddenly an across the board cost pressure of 10% on every product you sell in a market that also affects every single one of your competitors it makes no commercial sense to absorb it in full and make no changes elsewhere.

But that’s exactly what they do all the time.

Do you remember imported cars? Imported cars came about because different countries had different tax regimes and do the manufacturers adjusted the base price of the cars to suit.

And surely no-one has forgotten how a left-hand-drive car made in Germany is significantly cheaper in the USA than in Europe? How can that be? Because they choose to make a bit less in America to sell cars in volume. And it will be the same in the UK. They want to maintain market share so they’ll eat up the price differential.
 
Soldato
Joined
4 Nov 2004
Posts
14,365
Location
Beds
No, you are quite right - I don’t ‘need’ to do anything. It was just because a fortunate time/deal/opportunity presented itself.

Anyway, it looks like the decision has been made. I waited days for a call to confirm the situation either way, nothing. I did chase it up once, but I’m not going to force them to take my business, especially with things are they are. They appear happy to bury their heads. Oh well.

Someone else with a physical car seems keen for my business. We’ll see how that goes.

Was it the OPC up here?

Looking forward to seeing the new beast if the deal works out.
 
Man of Honour
Joined
17 Oct 2002
Posts
159,534
They want to maintain market share so they’ll eat up the price differential.

But they won't need to do this - because it will affect the competition, too. So there is no need.

What are you going to buy instead if a 3 Series has a 10% tariff? A C Class with a 10% Tariff? Perhaps a Volvo S90 with a 10% tariff instead?
 
Soldato
Joined
13 Jul 2005
Posts
19,205
Location
Norfolk, South Scotland
But they won't need to do this - because it will affect the competition, too. So there is no need.

That might be the case at the premium end of the market where it’s German vs. German but when it’s SEAT or SKODA or VW (or even Audi), Renault or PSA group against you a Korean or Japanese or US competitor then it’s very much an issue because they’re already signed up to deals or on WTO terms already and they’re priced at a 10% discount vs. anything European. At that point you have to look at how you’re going to tackle that...
 
Soldato
Joined
1 Mar 2010
Posts
21,781
Exchange rate may represent a double whammy too - pound sinking versus euro/yen. 95p for a euro , or even, £1 parity.
dealers can do some hedging, but will need to change the transaction price, following JoeT's terminology.

[ The govenment will put this duty bounty in the large pot somewhere ? for Nissan/UK manufacturers ? ]
 
Soldato
Joined
13 Jul 2005
Posts
19,205
Location
Norfolk, South Scotland
But they won't need to do this - because it will affect the competition, too. So there is no need.

What are you going to buy instead if a 3 Series has a 10% tariff? A C Class with a 10% Tariff? Perhaps a Volvo S90 with a 10% tariff instead?

Actually South African built C-class won’t have an additional tariff. And I love the way you just ignore normal people with normal cars. I get the OP’s argument that he wants a particular car which isn’t heavily discounted but most German branded cars are available with massive discounts. Which brings me back to my original point. The price will stay the same but you won’t get such a big discount. And all used car values will firm up as a result.
 
Soldato
Joined
13 Jul 2005
Posts
19,205
Location
Norfolk, South Scotland
Exchange rate may represent a double whammy too - pound sinking versus euro/yen. 95p for a euro , or even, £1 parity.
dealers can do some hedging, but will need to change the transaction price, following JoeT's terminology.

[ The govenment will put this duty bounty in the large pot somewhere ? for Nissan/UK manufacturers ? ]

I doubt it. The dealers don’t pay in Euro, they pay in Sterling. They will pass on whatever list price increase is set by the manufacturer. And remember that we’ve been living with a high exchange rate for 4 years. Most of that realignment happened 4 years ago, so the shock will be significantly less now. Plus you’re assuming that the pound will drop massively again. Which it might, but given the disastrous state of the Euro zone, and the alleged massive blow to the German economy caused by the UK stopping buying German cars, it might not.

And before you jump in with ‘people aren’t not buying German cars’ in just this thread we’ve seen 1 definite order cancelled (£200K 911) and potentially a second (OPs Macan). That’s £275,000-ish of lost orders. In 2 cars. Multiply it up by a few more and it’s substantial sums of money in play. And if the recession deepens then there will be fewer new cars sold to private buyers. Also remember that by far the biggest buyers of new cars in the UK are fleets and company car drivers want electric cars. The very cars the Germans and Europeans aren’t competitive in. I think there are very interesting times ahead.
 
Soldato
Joined
4 Nov 2004
Posts
14,365
Location
Beds
I’m afraid I cannot confirm nor deny ;)

Indeed, I’ve gone in a slightly different direction now but it definitely ticks all the ‘Beast’ boxes :D. Should know this week coming.

I can also neither confirm or deny I understand your reply :D

Waiting eagerly for the Beast.
 
Soldato
Joined
1 Apr 2003
Posts
11,890
Location
Northamptonshire
The price will stay the same but you won’t get such a big discount.

So you're saying that consumers will pay more for cars after a 10% tariff, because they wont get such a big discount? In other words, transaction prices will rise.

When people refer to "the price" they normally mean the price they actually pay, not the list price (which is normally irrelevant except for various aspects of taxation). Prices will likely rise as a result of a 10% tariff, which I think we agree on.
 
Last edited:
Soldato
Joined
13 Jul 2005
Posts
19,205
Location
Norfolk, South Scotland
So you're saying that consumers will pay more for cars after a 10% tariff, because they wont get such a big discount? In other words, transaction prices will rise.

When people refer to "the price" they normally mean the price they actually pay, not the list price (which is normally irrelevant except for various aspects of taxation. Prices will likely rise as a result of a 10% tariff, which I think we agree on.

And I always said that. I don’t think list prices will go up much, if at all. There just won’t be as much discount available because the manufacturers will use up some of their impressive margins to protect sales volumes.
 
Soldato
Joined
1 Apr 2003
Posts
11,890
Location
Northamptonshire
And I always said that. I don’t think list prices will go up much, if at all. There just won’t be as much discount available because the manufacturers will use up some of their impressive margins to protect sales volumes.

I think what you're trying to say is that the gap between list price and transaction price will narrow, and I'm not convinced that a change to the underlying costs would do that. If prices rise it will likely be a result of both list prices and transaction prices both rising. It's far easier to put up a list price as a result of a tax change, than it is to claw back discounts on a fleet customer which has a contractually-agreed % discount, for example.

When you say "impressive margins" you're referring to theoretical margin vs list price, not actual achieved margin - it's an odd way to describe the situation I think.
 
Man of Honour
Joined
17 Oct 2002
Posts
159,534
The price will stay the same but you won’t get such a big discount.

So the price goes up.

The price of my car wasn't the list price, it was the price the dealer invoiced to me. Nobody in this thread except you is talking about the list price we're all talking about the price actually paid.

I had to re-read your post twice to make sure you'd really just said 'the price won't go up, the car will just cost more to buy'.

But it seems that's exactly what you said :D
 
Soldato
Joined
1 Mar 2010
Posts
21,781
Also remember that by far the biggest buyers of new cars in the UK are fleets and company car drivers want electric cars. The very cars the Germans and Europeans aren’t competitive in.
yes that's a good point, there are, some new ev's, they do want to sell to us though, albeit many of the ev's are smaller than typical company cars. (e-tron excepted),
the private side is bigger than I'd thought. V

Amusingly I was thinking of a Cuban like car future for the UK (maybe generally) - yes, not an embargo, but 2nd hand values rallying with expensive foreign cars, diy mechanic growth too

+1

Do we know if the purchases were company/businees biased
https://www.autoexpress.co.uk/news/105893/new-car-sales-reach-145000-june-dealers-reopen
There were 72,827 private new car registrations in June 2020 - down 19.2 per cent year-on-year - while fleet and business sales were 69,498 (down 45.2 per cent) and 3,052 (down 52.6 per cent) respectively.

ok - thought it was private that would suffer more, and business from higher waged professionals, would hold.
 
Soldato
Joined
18 Oct 2002
Posts
14,047
Location
West Midlands
If there is suddenly an across the board cost pressure of 10% on every product you sell in a market that also affects every single one of your competitors it makes no commercial sense to absorb it in full and make no changes elsewhere.

^^ This.

Also, it actually will make Tesla more affordable as you already get hit with the 10% tariff, so not all the competitors will be covered. :)
 
Back
Top Bottom