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Brexit communications

Overview

Will manufacturers protect the price for a vehicle ordered in 2020, but not delivered until 2021?

There are various price-protection policies, depending on manufacturer. We recommend contacting us for advice on individual orders or vehicle choices in the first instance.

Volkswagen Group UK brands (Volkswagen, Audi, SEAT, ŠKODA and Volkswagen Commercial Vehicles) will price-protect all orders received by 5.30pm on Wednesday 2 December. Please ensure all orders are placed with us as promptly as possible. We anticipate an increased volume of orders and therefore cannot guarantee that we will be able to place orders received close to this deadline.

To qualify for price protection, vehicles must be delivered on or before 31 March.

What are the main changes and how will they impact fleet operators?

If the UK leaves the EU without a trade agreement, the UK will revert to World Trade Organisation trading tariffs. As a result of this, it is expected that import tariffs for vehicles from the EU (and some other countries) are likely to increase by 10%. We expect this tariff increase will be directly reflected in new vehicles’ purchase prices, which will, in turn, impact monthly leasing costs.

How significant is the impact of Brexit for fleet operators?

“With 72% of fleet cars and 68% of vans estimated to be sourced from the EU, the impact of not having a free trade deal would be disastrous for the fleet industry. Tariffs would add £2.1 billion a year to the UK fleet sector’s car renewal costs and £310 million a year to the sector’s van renewal costs, according to industry figures.”
From the British Vehicle, Rental and Leasing Association (BVRLA)’s EU Exit Bulletin, 22 October 2020 https://www.bvrla.co.uk/uploads/assets/47614261-dc05-401f-b0bb8dba4fec79e0/22-October-Bulletin.pdf

If my Q4 delivery is delayed into 2021, will I have to pay increased rental resulting from the additional tariff?

Find out if your vehicle could qualify for price protection (see our answer to question 1 for more information). If your vehicle does not qualify for price protection, we recommend discussing your options with us.

We can support you with planning all your 2021 vehicle orders, with a variety of options for minimising costs and driver disruption.

These could include:

  • cancelling the order (a cancellation charge may be payable) and ordering an alternative vehicle with a lower/comparable monthly rental
  • paying the increased rental
  • considering short-term/daily rental or medium-term/flexible rental
  • extend the vehicle’s current contract
What is your cancellation policy?

Cancellation options depend on several factors: the manufacturer’s overall policy, the model, the specific circumstances and the supplying dealer. Please contact us for advice on a case-by-case basis.

Policy and benchmarking

How will the potential tariff increase affect my company vehicle bands and my policies? Can you advise on assessing the impact?

There are a significant number of variables involved in calculating the total impact at a business-wide and a driver level, specifically the range of vehicle brands and power trains you wish to consider and the way in which you calculate your vehicle bands (eg whole-life cost or benefit-in-kind tax band). We will advise our customers on how to plan their banding and policies to minimise the impact on driver benefits and operational costs. If you’re not a Volkswagen Financial Services | Fleet customer, we can use the same methodology to provide a no-cost consultation on your policy and bands.

Whole-life cost impacts

I run a large mixed car/commercial vehicle fleet, including rental vehicles. Can you advise the overall impact on my business bottom line, including servicing costs, insurance etc, if there is no free-trade agreement with the EU?

Yes, we can create a whole-life cost analysis for your fleet and work with you to find cost savings to mitigate the impacts of price increases resulting from a ‘no-deal’ Brexit. Two specific areas of consideration are driver benefit in kind (BiK) bands and employer Class 1A National Insurance contributions (NICs), which can be reduced by considering lower-emissions or zero-emissions vehicles.

Order and delivery timings

I have ordered a number of vehicles already that are not needed until 2021. Will the monthly rentals for these increase by (for example) 10%, depending on the new tarrifs?

As you have suggested, this will depend on what new tariffs are in place for 2021. See our answer to question 1 for more information on the likely impacts and the opportunity for price-protecting these orders

Can I bring forward 2021 orders to be delivered in 2020, to avoid cost increases?

Yes, this is an option. In the first instance, see our answer to question 1 for more information on the likely impacts and the opportunity for price-protecting these orders. Then contact us to discuss your options.

If I bring forward the renewal of an existing vehicle to 2020, will I incur early termination charges on the returning vehicle?

This will depend on several factors. Please contact us for advice on a case-by-case basis.