Will Brexit Affect Car Leasing?

Brexit directions

It’s looking more and more likely that a ‘no deal’ Brexit will be the fate of the UK’s exit from the EU, which would bring with it potential price increases for car lease deals and restrictions on how you can use the car.

Are you interested in leasing a car, but want to know whether it’s best to lease before or after the Brexit transition period (31 December 2020)? Read our guide to discover how Brexit could affect car leasing.

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UK-EU Trade and Cooperation Agreement means no tariffs, but non-tariff barriers could still increase costs

  • Timely trade deal between the UK and Europe means that 10% tariffs for whole vehicles, parts and components don’t apply
  • As a result, customers won’t have to face increasing prices on cars passed down from manufacturers because of tariffs
  • However, non-tariff barriers such as customs declarations, certification costs, border delays and potential of EU customers choosing other suppliers could all result in price increases

The UK automotive industry was desperate for the country to strike a deal with the EU to allow for tariff-free imports and exports of cars. Without it, there would be a 10% tariff added onto completed cars imported into the UK from EU countries. A timely UK-EU trade deal has meant that these tariffs won’t have to be partly covered by customers at the point of sale.

According to SMMT (Society of Motor Manufacturers and Traders) research, an increase in car prices would have been around £1,500-£1,700. For electric cars this would have been more because of higher premiums placed on these models, mainly due to the costly methods used in building these cars (e.g. sourcing rare Earth materials).

Although the TCA has meant that there are no longer risks of increasing prices from tariffs, there are still the non-tariff barriers above to consider. These teething problems caused by Brexit are undoubtedly going to increase costs for manufacturers trying to import and export car parts, as the process becomes more difficult.

BMW, for example, has already said that it will increase the prices of its new cars, irrespective of a UK-EU trade deal being agreed. In some cases, this increase will be more than £3,600 for some models.

Some manufacturers (e.g. Volkswagen) made a point of offering a price protection on orders of new cars made before the Brexit transition deadline of January 1st 2021. However, it’s still unclear whether they will be able to completely absorb post-Brexit costs.

Even though leasing doesn’t require you to purchase the car, they are still new vehicles, many of which are assembled outside of the UK. So, should the leasing funders that supply the vehicles decide not to absorb all non-tariff barrier costs, it’s likely that it will be spread over the lease cost for the car.

Investment into the UK auto industry more likely, production of popular models should be able to continue

In the SMMT’s latest trade report, it was revealed that new European-built cars make up 80% of the vehicles on our roads. This compares to just 12% of cars built in the UK sold here.

Having a variety of cars to choose from is mostly down to the UK and EU having good trade terms, which the TCA is likely to preserve.

As well as ensuring tariff-free trade of whole vehicles and parts, the new deal also makes the UK more of an attractive investment option.

For this reason, Nissan‘s UK plant in Sunderland and Vauxhall‘s assembly point in Ellesmere Port are likely to be a particular focus. Both are responsible for creating their popular respective models, the Qashqai and Astra. So, there’s renewed hope that car buyers will have access to a variety of model choices in the form of imports from

Should I look at getting a lease car before 31 December 2020?

Although EU agreements often have some ‘extra time’ leeway, a hard deadline of October 2020 has been set for the UK and EU to come to agree a deal before the transition period date. This is to allow enough time for legal paperwork to be drafted, translated into all 24 official EU languages and then agreed upon. 

This is looking less likely by the day, and some manufacturers have already stated that they’re going to increase prices of their cars in the event of a no deal Brexit. So, if you’re in the market for a new car, it’s likely that you’re going to get cheaper monthly rentals by ordering before a no deal decision.

We recommend looking at our ‘in stock’ cars to avoid having to wait for your car to be built and shipped to the UK. Most factory orders take up to four months to be delivered, so there’s a risk that you could be hit with higher monthly rentals from import tariffs if you take delivery in 2021.

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