The Effects of Brexit on the Motability Scheme: How You May Be Affected
Brexit may have an impact on Motability car prices in the UK. Find out more about how you may be affected.
Dec 11, 2020
It’s been a gruelling year for the motor industry given the recent pandemic. We’ve seen production sites being shut down, thousands of deliveries being delayed and some dealerships closing their doors for the final time, but between the chaos of the pandemic, it seems we’ve lost track of Brexit and the growing uncertainties that come with a no-deal result.
As we come to the end of 2020, car users around the UK demand to know how their lives (and wallets) will be affected so we’ve rounded up a summary of possibilities revolving the motor industry and Brexit, particularly, the Motability Scheme.
Brexit and Motability – FAQ
How does Brexit affect the Motability Scheme?
The relationship between Brexit and the Motability Scheme has much to do with the Free Trade Agreement and finding a balance that works for both the EU and the UK. Due to the nature of uncertainty regarding this, it’s not possible to know the exact availability of car ranges and effects on car prices in Britain after 31st December 2020.
What we can anticipate, however, is that if the UK does not manage to reach a Brexit deal by the end of the year, then the importing of cars into the UK from the EU would risk falling under policies of the World Trade Organisation – a 10% import tax on any vehicle imported into the UK.
For example, a car costing £20,000 now, may rack up a price of £22,000 from January 2021.
What advice is being given to Motability customers?
The safest way to avoid any price increases would be to order your Motability car before the announcement of a Brexit deal. The Motability Scheme will be honouring any orders placed before the 31st December, meaning you can go into your 3-year lease knowing exactly where you stand.
There may be short-term disruption to the delivery of vehicles due to demand outweighing supply as importers become accustomed to new customs regulations, but the Motability Scheme will continue to work with dealerships across the UK to minimalise the extent and may offer courtesy vehicles until your new car is ready.
Will the line-up of cars on offer be different?
If the UK becomes subject to a 10% import tax, it is likely that fewer cars and specifications may be imported. However, the World Trade Organisation 10% tariff only applies to vehicles being imported from the EU, meaning brands that build their cars in countries outside of the EU may begin to import unfamiliar specs from other global markets into the UK from January 2021.
To speak to a Motability Specialist about the best personalised offers for you, you can call us on 0115 939 5000 or simply fill in the enquiry form below.
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I have ordered a new car, will this be affected?
There will be no price increases as a result of Brexit to existing orders. According to the Motability Scheme, any orders already placed will be honoured with the agreed Advanced Payments so there’s no need to worry there. The scheme will be going ahead with existing orders as normal and they simply advise keeping in contact with your chosen dealer regarding delivery dates.
If I order a new car in 2021, will I have to pay more?
Given the uncertainty, all parties involved are in close negotiations with car manufacturers to make the transition into the new year as seamless as possible. As usual, the Motability Scheme Car Price Guide will be released in January 2021 where you may see increases in figures.
The extent of this price increase will depend on the nature of the end result, that is, whether or not the UK government is able to reach a Brexit deal before 31st December 2020.
If the UK fails to reach a Brexit deal, we run the risk of a 10% import tax on any vehicle being imported to the UK under World Organisation Trade policies.
But Motability customers lease cars not buy?
Yes, as a Motability customer you’ll be exchanging your mobility allowance and leasing your vehicle. However, list prices will determine which cars will remain available on the Scheme and how much of an Advance Payment is required.
Should the UK have to move through the World Trade Organisation, manufacturers may have to reduce the number of cars they import into the UK in order to be able to offer zero Advance Payments, or the cost of imports will be shifted onto the customer whereby Advance Payments are increased. Another option would be to offer lower-spec vehicles on the Motability Scheme in the attempt of maintaining low prices for customers.
If you are concerned or would like to discuss your options further with a Motability specialist, please get in touch using the button below.