Car makers roll out ‘first wave’ of rises
Inflation rears its head as pound falls further than worst predictions
ALL eyes were on the headlinegrabbing spat between Unilever and Tesco last week, but the car industry has been quietly adding hundreds of pounds to the list price of new vehicles for British drivers.
Major car makers have been hiking prices in recent months and there are fears further rises could follow. Even British manufacturer Vauxhall has raised its prices. This weekend the company defended the increase to The Mail on Sunday saying it faced higher costs even on vehicles made in the UK.
French group PSA, which makes Peugeot and Citroen cars, was the first to act, raising its prices by 2 per cent in August, just two months after the crucial vote.
US giant Ford was not far behind, revealing a 1.5 per cent price rise last month. Vauxhall increased its prices by 2.5 per cent from the beginning of October.
Japanese brands Honda and Nissan are hiking prices by an average of 0.9 per cent and 1.5 respectively this month, while Suzuki will bump up the cost of some of its cars by 2 per cent.
In June, The Mail on Sunday reported that the automotive industry had come out overwhelmingly in support of a Remain vote. However, pleas by car bosses failed to be heeded and since then the industry has been counting the cost.
Vauxhall’s European parent company Opel has said Brexit has so far cost it £346 million while Nissan has warned that the announced price hikes were just part of a ‘first wave’ and that more were to follow.
This means some of Britain’s most popular cars are more expensive by hundreds of pounds. The cost of a Ford Fiesta now starts at £13,545 – a rise of £200 – while the Vauxhall Astra is £470 more expensive, with prices starting at £15,915.
But some marques are keeping their powder dry. One of the UK’s biggest car makers, Jaguar Land Rover, which employs 6,000 staff at its Solihull plant, told The Mail on Sunday it had ‘no planned increases’. Similarly BMW, which also owns Rolls-Royce and Mini, which has a plant in Oxford, said it was ‘closely monitoring’ the situation, but had no plans regarding price hikes. Fiat, which makes the popular Fiat 500, has also not revealed any increase.
Some experts question why UK-based car makers should be raising their prices at all. The Vauxhall Astra and Honda Civic, for example, are built in the UK. But a Vauxhall spokesman told The Mail on Sunday the price rise was justified by the increase in real costs caused by the slump in the pound.
He said: ‘We increased prices by an average of 2.5 per cent on October 1 as a direct result of exchange rates. We buy a lot of components and import much of our range from mainland Europe – only the Astra and the Vivaro van are built here – hence the issue with the euro.’
But Prof Garel Rhys, director for automotive industry research at Cardiff Business School, said consumers shouldn’t panic about rising prices. He said: ‘List prices may have gone up, but it’ll be hard for manufacturers to make them stick. The ethos of discounting and haggling on the forecourt is ingrained. Only the most naive pay full price.
‘In Britain we import 83 per cent of our cars and export 80 per cent. So while the fall in the pound looks like a huge hit, manufacturers can get a lift out of exports. They must be careful they’re not just using the currency issue as an excuse to raise prices. It’s all very strategic though. They are watching each other closely – it’s like a chess game.’