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Globalization and the Automobile: Brexit Potentially to Influence the Price

A 2016 NY Times article, “New Cars Are Too Expensive for the Typical Family, Study Finds,” reported that new car prices were a pain point for consumers. But if we take this story a bit further, automobile prices have been a hot topic for many stockholders in both the new and pre-owned car segment(s). Moreover, the pricing of a new product helps drive more sales of pre-owned product and vice versa. 

The journey of automobile pricing is a pain point for manufacturers and their respective financial services, wholesalers, remarketers, retailers, and suppliers. This pricing journey starts before vehicles are manufactured, and the end-consumers typically bear the costs of price setting. Many variables go into setting the original price of a new automobile at the manufacturer, a pre-owned automobile at the retailer, and wholesale price at the auction. And it may soon get more challenging and more expensive for the end-consumer.

Globalized auto industry vulnerable to new Brexit borders — ABC Newshttp://apple.newsBritain's car industry, which employs 814,000 people, illustrates the struggle the country faces as it prepares to exit the European Union

A recent ABC News report, “Globalized auto industry vulnerable to new Brexit borders,” highlights prices may increase by 10% ($1,920 on any vehicle) for “the cost of finished vehicles.” This assumption may impact the prices of future new vehicles and future pre-owned vehicles if the Brexit negotiations fail to keep free trade within the European Union. If the negotiations do not maintain the single market structure, the journey of automobile pricing will get tougher for all stockholders as mentioned above. 

Negotiations begin the week of August 28.

Sources:

  1. NY Times Article: https://nyti.ms/2jR8pqD
  2. Globalized auto industry vulnerable to new Brexit borders - ABC News https://apple.news/AKEaY8VSXTrm41VUon2oa8Q 
  3. Photo of dollar bill courtesy of StockSnap/NeONBRAND Images.