A new EU-Japan trade deal could result in UK car buyers shifting away from European brands in favour of Japanese rivals, says UHY Hacker Young.
The national accountancy firm believes that the reduction of tariffs on imported Japanese cars gives Japanese manufacturers scope to cut prices, which could win them greater market share in the UK from European rivals.
The EU-Japan trade deal, which comes into effect today (Friday, February 1), immediately sees the current 10% tariff on Japanese cars imported into the EU to 9.2%. EU import tariffs on cars manufactured in Japan will continue to fall year-on-year and by 2032 will be zero.
While the UK will only benefit from the EU-Japan deal up until the UK’s planned exit from the EU on March 29th, the two countries have already agreed in principle to a replacement deal post-Brexit.
An expanded trade deal with Japan is important as Japanese brands currently account for 17.1% of new cars sold in the UK.
Despite Japanese brands now manufacturing many of their higher-volume models in the UK, a significant percentage are still made in Japan. For example, while Honda manufactures its Civic model at its Swindon plant, it still imports its other cars from Japan.
Paul Daly, partner at UHY Hacker Young, said: “The EU-Japan trade deal is set to be a significant help for Japanese car sales in the UK – European manufacturers will be concerned that their market share could be impacted by reduced prices on Japanese imports.
“The picture is complicated further by the fact that a no-deal Brexit could eventually lead to tariffs on European cars by the UK, further assisting Japanese manufacturers in competing on price and marketing spend.
“If both the EU and Japan are granted 0% tariffs on UK imports, we may see greater price competition between European and Japanese brands, which would ultimately benefit consumers.”
The UHY Hacker Young Group is one of the UK’s Top 20 accountancy networks with more than 100 partners and 540 professional staff working from 23 locations around the country.