Q2 new car finance ‘business as usual’ despite Brexit doubts

Dealers have pushed through the first quarter and despite the delay to Brexit and a broadly flat Q1 for private registrations (down 0.8%), UK customers are continuing to buy cars.

One dealer told AM that some customers brought their purchases forward to avoid potential 10% price increases in the event of ‘no deal’. This may account for why private registrations are not down as much as they could have been.

According to Mike Jones, ASE chairman, there have been no sweeping changes with incentives and PCP and PCH deals are what is keeping the market in relative health as it continues to get on with the job despite the lack of clarity on the future of the UK’s relationship with Europe.

Jones said: “We’ve only just closed Q1, but all signs point towards Q2 proceeding as normal.

“Incentive plans will continue to flex, but everything around that right now is business as usual. Despite the level of uncertainty politically, the market is actually performing well.

“For the vast majority of people in the UK, a car is a necessity and the continued success of PCP and PCH automatically bring people back to the market and they have to make a decision at the end of that contract. That is what is keeping the market going.”

While dealers are getting on with the job, they have to consider the potential for a no-deal Brexit and what this will do to new car prices and manufacturer’s incentive plan strategies this year.

Fraser Brown, managing director of MotorVise, said: “New car price increases in the event of a no-deal Brexit, with currency fluctuations and tariffs combined, could take you from £15,000 for a family car up to north of £20,000.

“In the event of a no-deal Brexit, incentive programmes are likely to soften and then you’ll see prices rise three or four times gradually over the next six months.”

Ford, the UK’s biggest volume player, is continuing with its broad support of 0% APR across the majority of its model range, an indication that the strategy on incentives for the biggest player in the UK remains largely unchanged.

Models such as the Ka and Fiesta are affordable at £99 or £178 a month in Q2. The sportier Fiesta ST-2 is the only model across Ford’s range of representative examples that has an APR above 0%.

Andy Barratt, Ford of Britain managing director, said: “New models like the Fiesta and Focus Active are gaining strong traction with our customers.

“Despite the economic uncertainty in large part caused by Brexit, we continue to expect a strong sales year for Ford in the UK.”