The slump in the value of the pound is causing big losses for a number of automakers.
A number of automakers including Ford, Vauxhall, and Nissan are hiking their prices in the United Kingdom, in response to the continuing slump in value of the pound against the euro sparked by the UK’s vote to leave the European Union.
Automotive News Europe reports that General Motors Europe President Karl-Thomas Neumann confirmed that prices of Vauxhall-badged cars will rise by at least two per cent.
Nissan, meanwhile, announced increases of one-and-a-half to two per cent would be implemented from the start of this month, which Guillaume Cartier, head of sales and marketing of Nissan Europe, described as the “first wave” of price rises.
In September, Ford increased prices by 1.5 per cent, while Peugeot added two per cent in August. According to market researchers JATO Dynamics, Honda and Suzuki are also set to increase their prices.
Ford, Vauxhall, and Nissan all operate manufacturing facilities in the UK, producing both vehicles and components. Ford is expecting the post-Brexit turmoil to cost it between $400 million and $500 million next year, while GM has predicted it will take a $400 million hit in the second half of this year alone.
The UK is Europe’s second largest market for new cars, so it seems inevitable that significant currency fluctuations will eventually impact every automaker with operations there. Even those that build cars in the UK will be affected as they all use components made elsewhere.
Price rises could affect car sales in the UK, however Cartier suggested low interest rates will reduce their impact as some 80 per cent of UK buyers take out some sort of finance package.
UK Prime Minister Theresa May is determined to maintain free access to the European single market, but EU member states are likely to make doing so very difficult. Tariffs could be imposed on UK imports and exports as a result, sending car prices even higher.
Source: Automotive News Europe