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Motor industry bracing itself for short-term negative impact after Brexit

  • No respondents quizzed believe Brexit will have positive impact on the motor industry
  • Brokers expecting short term fallout from leaving the EU
  • More brokers have a positive outlook for LCVs, caravans and motorhomes

No British motor finance brokers and dealers quizzed in an industry poll think Brexit will have a positive impact on the motor finance market, new research reveals.

When asked how they thought Brexit would impact on the overall motor finance market, 52% said it depended on the deal, 19% said no change, 17% said it would have a negative impact and 12% did not know - but positive impact got an unusual 0% response.

General views also highlighted that many thought there would be a short-term blow to sales that could dissipate within a few years' time.

The findings are from Paragon's regular industry report, Headlight, which polled around 45 key vehicle finance brokers and dealers operating in the UK at the beginning of November.

They were also asked their thoughts on how Brexit would impact on varying types of vehicles for which more brokers had a positive outlook for commercial vans, caravans and motorhomes than prestige or new cars.

Julian Rance, Director of Motor Finance at Paragon, said:

Through our extensive work with motor finance brokers and dealers, we know that Brexit is at the forefront of everyone's mind in the industry and this survey gives real insight into what people on the frontlines are expecting.

We do regular surveys to gauge the temperature of issues in the industry and it's unusual to get zero for a response, so it's a very pronounced statement on the thoughts of the industry on Brexit.

Most people questioned felt that a lot rested on what kind of deal could be negotiated and there was a general feeling that there would be a short-term impact that would eventually stabilise.

Brokers and dealers expressed a range of views on Brexit. Here is some feedback, in their own words:

Confidence is already waning and I can't see this recovering before March 2019 and, almost certainly, worsening further post March 2019

If we have a hard Brexit with no customs arrangements, it would be a disaster in the short term

New cars may suffer from tariffs if the two parties do not get their act together

Availability of new cars will effect residuals but the fuel dilemma is probably more significant short term

Initially, there will be a slow down on everything until everyone gets used to the effects of leaving, then everything will stabilise

I think people will wait for things to settle down before they commit to finance

Any short-term negative impact will dissipate after 24 months

Everyone will still need cars, everyone will still need finance… just different cars based on environment needs and targets

The UK is the biggest European market for cars. Europe needs us

If after leaving the EU, there are imposed travel restrictions, the sale of caravans and motorhomes is likely to increase, so it all depends on the deal.

6 December, 2018

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551