New car price - are Mercedes pricing in tariffs now ?

[wivenhoe]

Has anyone got on order a new car for delivery after 29th March ? I am wondering how (or if) MB are allowing for tariffs if there is no deal or if they are saying the price at delivery may change after Brexit

 

[markjay]

I don't know the answer, but I am assuming there would be a standard clause in new cars' sale contract that says that the price excludes any taxes that may be applicable etc etc or words to that effect.

 

[Dryce]

Has anyone got on order a new car for delivery after 29th March ? I am wondering how (or if) MB are allowing for tariffs if there is no deal or if they are saying the price at delivery may change after Brexit

Usually vendors cover themsleves by transfering risk to the customer - so somethig to taht effcte will buried in the Ts & Cs if they are doing their job properly.

There is however a common misunderstanding on WTO. The importing nation may decide to charge lower tarriffs if it chooses. The media often give the impression that the tarriffs on imports are automatic and mandatory. So WTO doesn't automatically mean that the tarriffs will be applied - it hands the UK government the discretion to apply tarriffs up to WTO levels.

 

[markjay]

Usually vendors cover themsleves by transfering risk to the customer - so somethig to taht effcte will buried in the Ts & Cs if they are doing their job properly.

There is however a common misunderstanding on WTO. The importing nation may decide to charge lower tarriffs if it chooses. The media often give the impression that the tarriffs on imports are automatic and mandatory. So WTO doesn't automatically mean that the tarriffs will be applied - it hands the UK government the discretion to apply tarriffs up to WTO levels.

True, but if the other party imposes tariffs on imports, you won't drop the tarrifs your end until the other party does the same (usually as part of a trade agreement or a treaty), otherwise you will be left with no leverage and with a negative trade balance.

So if the EU imposes tarrifs after Brexit, it is very unlikely that the UK won't reciprocate.

 

[MercedesDriver]

Usually vendors cover themsleves by transfering risk to the customer - so somethig to taht effcte will buried in the Ts & Cs if they are doing their job properly.

There is however a common misunderstanding on WTO. The importing nation may decide to charge lower tarriffs if it chooses. The media often give the impression that the tarriffs on imports are automatic and mandatory. So WTO doesn't automatically mean that the tarriffs will be applied - it hands the UK government the discretion to apply tarriffs up to WTO levels.

As I understand WTO rules, one country can not discriminate others by implementing lower or no tarriffs unilateraly on goods from one country/zone without trade agreement in place and not on others. So, for example if we choose not to charge customs duty on cars from EU27 and we have no trade agreement with EU we must apply same 0% duty on all car imports from any other country in the world. That’s why countries make trade agreements or want to be a part of trade zones.

 

[Dryce]

True, but if the other party imposes tariffs on imports, you won't drop the tarrifs your end until the other party does the same (usually as part of a trade agreement or a treaty), otherwise you will be left with no leverage and with a negative trade balance.

So if the EU imposes tarrifs after Brexit, it is very unlikely that the UK won't reciprocate.

The point is the UK can make a choice.

And imposing tarrifs on imports makes locally manufactured cars more attractive.

It's a complicated situation because the UK exports and imports a lot of cars, components, and assemblies. The UK is one of the worlds biggest importers of cars *by value* as well as being an exporter.

 

[Dryce]

As I understand WTO rules, one country can not discriminate others by implementing lower or no tarriffs unilateraly on goods from one country/zone without trade agreement in place and not on others. So, for example if we choose not to charge customs duty on cars from EU27 and we have no trade agreement with EU we must apply same 0% duty on all car imports from any other country in the world. That’s why countries make trade agreements or want to be a part of trade zones.

Indeed.

And that means even if the UK imposes 0% the EU manufacturers lose price advantage - because car manufacturers outside the EU wil also be at 0%.

That would also have a knock on to the likes of BMW and MB and their range pricing where some models are manufacturered outside EU.

 

[MercedesDriver]

It looks like 10% customs duty on EU made cars will be added in the price lists.
Confirmed: 10% import tax on new cars from European Union | Autocar

 

[Teego]

It looks like 10% customs duty on EU made cars will be added in the price lists.
Confirmed: 10% import tax on new cars from European Union | Autocar

Only if we leave without a deal and go to WTO terms.
Of course 10% becomes 12% after vat.
But we all know that price lists are only a starting point.

 

[Darrell]

It looks like 10% customs duty on EU made cars will be added in the price lists.
Confirmed: 10% import tax on new cars from European Union | Autocar

Does this come into force after the tens of 1000s of new cars stashed in old airforce bases and fields around the country are exhausted??

 

[markjay]

Simple. Buy British. Now let me see.... British car manufacturer.... hmmm... that leaves us with the Morgan. Ooops.. sorry, no, looks like they have been bought by the Italians last year. Oh well...

 

[MercedesDriver]

Does this come into force after the tens of 1000s of new cars stashed in old airforce bases and fields around the country are exhausted??

I don't think that any of those 1000s had been invoiced by the factories yet tbh, so it might happen that all become duty chargeable if still unsold before the customs charge gets in place. The cars are probably just stored on airfields but the transfer of ownership of goods didn't happen until invoiced by the factory to the retailer.

 

[nyssa7]

Does this come into force after the tens of 1000s of new cars stashed in old airforce bases and fields around the country are exhausted??

This only comes into effect if:
we don’t agree a deal prior to Dec 31
for cars purchased in 2021 onwards

so not an issue if you plan to buy a new car this year. Given the number of German cars we buy, and that we are their biggest export market, even if a deal is not done straight away, the likes of Mercedes, BMW, Audi and Porsche will be lobbying very heavily for a deal to be sorted

 

[Nat]

I'm sure Porsche put on there order forms a couple of years ago that if the outcome of Brexit dictated that the cost of a new car was to increase due to tariffs, that the buyer would have to pay it.

When you look closely at the new car market, as a starting point. The price of a new entry level Ford Fiesta is £15/16k. That's a lot of money for an entry level car even if nobody pays list.

 

[Darrell]

I don't think that any of those 1000s had been invoiced by the factories yet tbh, so it might happen that all become duty chargeable if still unsold before the customs charge gets in place. The cars are probably just stored on airfields but the transfer of ownership of goods didn't happen until invoiced by the factory to the retailer.

I’m not too sure how it all works but are you saying that the stored cars are still owned by the manufacturers and not the dealers (retailers).

 

[Nat]

I’m not too sure how it all works but are you saying that the stored cars are still owned by the manufacturers and not the dealers (retailers).

Probably owned by a Finance house of some sort.

 

[MercedesDriver]

I’m not too sure how it all works but are you saying that the stored cars are still owned by the manufacturers and not the dealers (retailers).

That would be my guess as I can't see the why would the dealer pay VAT in advance before having agreed sale of a car. At least that's how we did with machine tools. We were keeping the machines in a showroom and only when sold to the customer, the same were invoiced to us by the factory. Maybe in automotive industry it is different, don't know, never worked with them.

 

[Dippo]

The cars in the UK will have had a value declared to HM Customs on an invoice, and that is the landed cost, which is what may be subject to a tax of 10%. Whether or not the importer has paid the manufacturer is irrelevant, but Customs need a value at the time of importation.

VAT is a totally different matter. The cars on airfields may be allocated to dealers, or may still be part of importer stock. Even when a car is 'wholesaled' to a dealer by a manufacturer, payment is not usually immediate, as the dealer earns 'free stocking days' from the manufacturer, which are often dependent on the amount of retail finance business the dealer places with the manufacturer. As a general rule, I believe VAT is not payable on a car until it is either retailed, or it has been in a dealer's stock for 360 days.

 

[MercedesDriver]

The cars in the UK will have had a value declared to HM Customs on an invoice, and that is the landed cost, which is what may be subject to a tax of 10%. Whether or not the importer has paid the manufacturer is irrelevant, but Customs need a value at the time of importation.

It is irrelevant and is a matter of their business model but the importer will have to pay to HMRC on import [10% of (net value + transport cost)] * 20% VAT

VAT is a totally different matter. The cars on airfields may be allocated to dealers, or may still be part of importer stock. Even when a car is 'wholesaled' to a dealer by a manufacturer, payment is not usually immediate, as the dealer earns 'free stocking days' from the manufacturer, which are often dependent on the amount of retail finance business the dealer places with the manufacturer. As a general rule, I believe VAT is not payable on a car until it is either retailed, or it has been in a dealer's stock for 360 days.

Don't know that

 

[John]

Simple. Buy British. Now let me see.... British car manufacturer.... hmmm... that leaves us with the Morgan. Ooops.. sorry, no, looks like they have been bought by the Italians last year. Oh well...

Aston Martin?