The average price of leasing popular cars surges eight per cent in two months thanks to post-Brexit vote inflation

Rebecca Smith
Inflation climbing has accelerated car prices, according to UHY Hacker Young
Inflation climbing has accelerated car prices, according to UHY Hacker Young (Source: Getty)

While the process of Britain leaving the European Union hasn't yet started, the wheels are already in motion for a rise in the cost of cars to consumers.

The monthly cost of leasing a basket of some of the more popular car models has risen by an average of eight per cent, from £245.70 to £264.70, in two months.

According to national accountancy group, UHY Hacker Young, the cost has started to climb as inflationary pressures have begun to filter through to consumers. The fall in sterling against the euro and the dollar is pushing up the cost of imports, and with many parts of vehicle manufacturers' supply chains now overseas, UHY Hacker Young says costs are going up and it's impacting consumers.

Read more: This trade expert has warned of a "catastrophic" Brexit

And while the more significant risks for the car industry will emerge in the wake of the Prime Minister triggering Article 50, in terms of uncertainty over tariffs and whether there's a shift of manufacturing to the continent, UHY Hacker Young says there are also risks in the near term.

Of the 10 vehicles monitored - including the Ford Fiesta and Focus, Vauxhall Corsa, VW Golf and Nissan Qashqai - five increased in price, four showed no change, while one reduced in price.

Paul Daly, partner at UHY Hacker Young, said: "It appears that Brexit, and the resulting fall in the value of sterling, has begun to place pressure on vehicle manufacturers and their distribution channels, forcing them to shift costs onto consumers. So far it is a small increase but a noticeable increase.”

Read more: UK car sales hit a record high - but have we reached "peak car"?

He added that further cost rises were likely "as the cost of components produced overseas ratchets up" and said it was "unlikely that the pain will be limited to the supply chain".

“For consumers, monthly payments are affordable as a result of interest rates remaining at historical lows and heavy discounting," Daly said. "As this level of discounting is expected to fall as post-Brexit pricing kicks in, the maintenance of strong residual values is absolutely critical to ensuring that monthly payments for vehicles remain affordable.”

Related articles