11 Jul 16

Theresa May premiership could cause “further instability” for UK car market

The UK's decision to exit the European Union will start to affect that country's used car market from the last quarter of this year, automotive data specialist Glass's predicts. There won't be an immediate effect because it will take some time for the first consequences of Brexit to have a noticeable impact – also due to the intervening summer break, says Rupert Pontin, director of valuations at Glass's. 

“We're in the calm before the storm”, according to Pontin. “The first factor to hit the market is likely to be fuel cost. As the pound has lost value, pump prices are likely to rise. The second factor is the choice of Prime Minister. We will then get an idea of when Article 50 will be enacted. This may trigger a period of further instability”. 

However, that period may start sooner than expected. On Monday, with her last challenger dropping out of the race, it became clear that Home Secretary Theresa May (pictured) is now the presumptive successor to David Cameron as Conservative party leader, and consequently also as Prime Minister. 

Pontin hopes this will help bring clarity sooner rather than later: “Hopefully, we will soon start to see a timetable emerging for the next few years, which will at least allow dealers and manufacturers to plan more accurately”. 

Later in the year, the scheduled publication of a number of economic indicators such as retail and housing could show a serious dent in consumer confidence, and make borrowing more expensive. Pontin said it was virtually “impossible to predict how strongly all these factors will affect the car market (…) It is difficult to foresee a situation in which Brexit does not have negative effects on both new and used car sales in the short and medium term even if – as Leave campaigners promised – it turns out to be good for the economy in the longer term”. 

Image: UK Home Office, CC BY 2.0

Authored by: Frank Jacobs