Now you might imagine this is the generic question where we provide the answer to get you to push forward with buying your used car. But it really isn’t as simple as that – we are heading for a tumultuous time in the Automotive Industry!
First let me paint you the picture.
If everything continues as it currently looks to be doing; from January 2021 car manufacturers are going to be facing a new cost to importing their new vehicles to the UK to sell: A 10% WTO (World Trade Organisation) tariff for cars imported from the EU – which is where circa 70% of all new cars registered in the UK currently come from. This 10% tariff if passed along in full to the consumer, is likely to represent around a 6.3% increase in price of the car you would be looking to buy.*
*This is based on industry averages, and relevant to research completed by the Society of Motor Manufacturers and Traders.
Now being realistic – particularly due to business and financial pressures caused by Covid-19 – the chances are high that the majority of this increase in costs will indeed be passed onto the consumer. Multiple large manufacturers have already confirmed that they will be increasing their prices; although many haven’t confirmed by how much! Further manufacturers have announced that they will be reviewing their prices – which a pessimistic eye might see as saying the same thing but being more delicate about it. Essentially the chances are that prices will rise across the board.
NOTE: There is some confusion generally among consumers as to whether prices will be honoured for cars ordered in 2020 (pre the rule change) but delivered in 2021 (post the change). The answer to this is that it depends upon the manufacturer from which you are purchasing, and should be clarified with them. Some will be prepared to honour prices, some won’t, and the position of some will be dependent on your vehicles geographical location as of January 1st 2021. Spokespeople for the Automotive industry as a whole are campaigning for a trade deal to be set up with the EU that guarantees a zero tariff similar to what we are currently used to; and this is still under review.
So for now, our recommendation would be to hope for the best, but prepare for the worst. However, we help our customers find used cars, not new ones! So how do all these changes affect you?
Well simply put, any increase prices on new cars will have a knock-on effect for used car prices too. the increase in prices is likely to steer more customers towards a used car rather than a new one (they will be in great company, and well looked after by businesses like us of course!) but what it is does mean is that the Used Car market will get more competitive, and prices are likely to increase because of this. In addition, dealers will be looking to meet this new demand, purchasing more used vehicles – driving up the price of traded-in cars – which again in turn increases the prices of vehicles on sale.
So what should you do?
This is a difficult one to answer as it very much depends on your situation, but there is a strong argument to be made to purchase your next used car now rather than later, as it means you can avoid validity of pricing and the uncertainty which surrounds it. There is a chance that if you are selling a vehicle as part of your purchase process then you COULD do better overall in 2021 than right now, but there is absolutely no guarantee of that, and in fact you could stand to be worse off. Essentially if looking now is an option, now is the time!**
**Of course there will always be exceptions to a statement like that, for example if you currently drive a Maserati and are intending to move to a Ford Fiesta, you will be better off taking advantage of the increase in trade-in prices likely to happen in Q1-2 of 2021, as it will outweigh the increase in purchase price. So for those few who are in a position like this, always consider your personal circumstances!
Is there anything else I need to bear in mind?
There are always a thousand extra things to consider – even under normal circumstances – but I would highlight a few key areas:
- Prices when purchasing from Dealers are set by the dealers, and some will be higher than others depending on circumstances. This means that shopping around (whilst always a good idea anyway) will become ever more useful. For this we believe we at Carsnip are well positioned to help the Used Car consumers of the UK, allowing them to compare to dealer stock (with updated prices as they develop) from our trusted dealer partners.
- The landscape (because of both Brexit and Covid) is volatile, and nothing can really assumed or guaranteed in advance. Keep an eye on the news at it develops, and we will publish information as it comes to light to help our users keep abreast of the situation.
If you are in the market now, or you are now considering pushing up your purchasing plans of a used car then see below a selection of our best deals listed – although we have 500,000+ vehicles to compare between. Use our natural language search bar (for example you can type: Black SUV £12000 40000 miles) and see your personalised results instantly!
About Carsnip
Carsnip is the UK’s largest used car search engine, with over 500,000 dealer sold used cars across the UK. We operate a natural language search engine, to help you find your perfect used car, and narrow down the choice by what’s most important to you.
About the Author
Sam Wardega is Carsnip.com’s very own in house car guru and journalist.
A lifetime Petrolhead who started with Hot Wheels aged 2, and now just spends his life savings on owning his dream cars. As they say, boys don’t stop playing with toys; they just get bigger and more expensive!