- Source: Land Rover

The UK might hate Brexit, but turns out it might be good for Australians

The two governments this morning have agreed that a free trade agreement should be signed prior to Christmas 2020.

1y ago

In case the rest of the world was wondering. Buying a new European or British vehicle is ridiculously expensive in Australia. It's much more so than the majority of the rest of the world with (in most cases) a 15% additional luxury car tax being applied to every vehicle. Not just that but the import duties for manufacturers are the biggest of almost anywhere else on earth. The laws were all geared at supporting the local automotive manufacturing industry (we all know what happened to that).

Boris Johnson, in his bubbly, blonde haired lack of wisdom, has been courted by our Aussie equivalent Scott Morrison. And as it turns out? They really like each other. Not just that but the foreign ministers get along swell as well (probably not a bad thing considering we were a penal colony of Britain). They like each other so much that they're convinced they want to sign a free trade agreement. Because for whatever reason we love British products.

If the free trade agreement gets signed and Brexit occurs (it's near inevitable at this point)? British car prices here in Australia should near instantly drop.

This does have a massive knock on affect though for the automotive industry here in Australia and there in the UK as well. If the free trade agreement gets signed and Brexit occurs (it's near inevitable at this point)? British car prices here in Australia should near instantly drop. In fact they should almost plummet. For example, a new Range Rover Evoque at base level costs almost $70,000AUD. With the lack of import duties and other costs associated with importing a car you should find that price drop by about $10,000AUD which also means luxury car tax doesn't apply as well. That could mean we see a Range Rover Evoque in or around the $50,000AUD mark.

Now you'll all find automotive manufacturers are a tad smarter than this though. Because of MINI, Rolls Royce, Jaguar, Land Rover, McLaren, Aston Martin and then all the plethora of Japanese and Asian brands which manufacture a vehicle in the UK drop their prices overnight than their current vehicles being driven on the road will have a large drop in resale value which will create a credit bubble.

The likely scenario is that the price drops will be introduced incrementally with model years or with additional specification to keep the vehicle pricing higher. That way there should be a space of about 4-5 years where resale values drop a small amount per year before stabilising. It is extremely exciting though.

To put the whole thing into perspective for Australians we have a free trade agreement with China currently and you'll notice that our Chinese car market is actually booming. With the introduction of brands like MG who provide a luxury, British designed product at a fraction of the normal price tag and LDV who primarily partake in commercial vehicles at the extremely low end. In both situations though the absence of normal duties allow those manufacturers to price their vehicles at a highly competitive level (in the case of the MG ZS that vehicle starts in the early $20,000AUD with leather, Apple Carplay and dual climate). This will also knock on for MG when they release the MG ZS EV next year (MG's first full fledged plug in electric vehicle).

The result for the Brits though can only mean higher vehicle sales volume. And considering China and America's lack of luxury vehicle manufacturing market I can't imagine those two countries would be too far behind to get some sort of lucrative trade agreement in place either. Higher foreign sales volume should theoretically also help push the pricing in the UK down as well (though we all know that treacle economics is a deeply flawed theory).

It also means the Brits might be able to get Vegemite. Because Vegemite is just great. Meantime half of the population here are excited to get behind the wheel of a Jaguar, Land Rover or MINI. So Prime Minister Johnson (I do realise the humour in Boris' name and I have used it as the but of multiple jokes already), if you don't mind? Can you please get Brexit done? And then sign this free trade agreement? Meantime don't mind me, I'll just be using the Land Rover Defender car configurator for the rest of the day.

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Comments (33)

  • I came on here to avoid Brexit....can't we talk cars instead 🤔

      1 year ago
  • “The UK may hate Brexit...” err hello? If that was true, the Lib Dems would be in government. Do keep up.

      1 year ago
    • Ok so what is good about Brexit then???

        1 year ago
    • We get more control of our laws and in the long run we would be able to get better trade deals if we establish ourselves as an independent country

        1 year ago
  • If Britain hates brexit then why did we vote leave🤔

      1 year ago
  • Does seem strange that the UK is pulling out of a very large free trade area, to sign a deal with a very small one.

    Will free movement of people become part of this deal?

      1 year ago
  • I'm pretty sure the jaguar land rover brand is owned by tata in India these days. Mini and rolls Royce by bmw.

    Very few UK car manufacturers remain apart from boutique manufacturers such as Ariel... and their atom is fantastic... but sadly very hard to make adr compliant for Australia.

    This makes it unlikely that we'll see an influx of affordable vehicles from the UK if brexit and a free trade agreement between Aus and the UK prevails.

      1 year ago