The price of new cars has increased sharply since the EU referendum result last June, leaving UK car buyers much worse off than they were 12 months ago.
That’s the findings of new research by What Car? magazine, which found that the price of new car models have increased by an average of 5.2% since the Brexit vote last year.
The rise in prices means that UK consumers have paid an extra £2 billion on new cars since June 2016, with some types of cars including popular SUV models increasng in price by up to 12.3%.
What Car?’s research suggested that the rise in price was due to a ‘perfect storm’ of rising inflation and the efforts of the motor industry to increase the profitability of dealerships.
To carry our the study, What Car? reviewed the price of vehicles be segment e.g. superminis, SUVs, luxury cars etc… and multiplied them by the Society of Motor Manufacturers and Traders’ official sales figures.
On average prices have increased by 5.2% for new cars between June 2016 and January 2017, however the difference in price varies significantly depending on the type of car.
Luxury cars, for example, were actually 0.2% cheaper in January that they were back in June 2016, while the price of executive saloons had only increased by a relatively modest 0.8%.
The average price rise of 5.2% is due to more significant increased, with performance cars now costing 8.4% more and large SUVs costing 12.3% more.
What Car? said the price increased were “partly a by-product of the Brexit vote” as the drop in the value of the pound following the referendum has had a direct impact on the cost of importing cars, as well as the price of the raw materials that go into their domestic production.
However, the research also suggested that the automotive industry itself has played a part in raising the prices of new cars. What Car? said they had seen evidence that car manufacturers were gradually reducing offers and discounts for new cars, and removing the most attractive low and 0% interest finance deals in order to increase profits.
Vehicles that cost less than £200 a month on a finance deal now make up 9.9% of the overall market, which is a drop from the 13% market share they had in June 2016.
With March being a big month for new vehicle purchases – due to the number plate change – many car manufacturers could be looking to launch new discounts and offers in the next few weeks.
On releasing their research, What Car? editor Steve Huntingford said:
“We knew average prices were going up, but rather than a gradual rise, our research has shown that there has been a perfect storm of elements that has conspired to create a big bang in price hikes.
“Fortunately, the aggressive sales targets that many dealers have mean you can still get a great deal if you buy from the right place.”