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Cost of Car Leasing Soars in the UK

2018-10-22 13:23 Monday

The cost of leasing a new car in the UK has risen 9% over a 12-month period, from an average of £232 in February 2017 to £253 in February 2018.

car leasing

Industry experts attribute the rising costs to high tariffs in the wake of the Brexit vote, as well as the devaluation of the pound which has pushed up the cost of importing for carmakers.

The three largest increases were for German-made cars-the Mini Cooper D (up 31%), Audi A3 (up 23%), and Mercedes-Benz C220 (up 19%). Furthermore, most of the cars that have seen costs increase are large engine diesel models, which may reflect the waning popularity of diesel-powered vehicles.

Manufacturers used to transfer excess unsold cars from Europe to the more-active UK market, which had resulted in lower car prices in the UK. However, as sales in Europe have risen in recent months, some manufacturers have opted to reduce their inventories in the UK market, counteracting the discount effect of car leasing.

In light of an ever-escalating trade war that has bringing higher interest rates and new rounds of tariffs expected to raise car and truck prices, a substantial number of consumers have chosen to purchase vehicles sooner rather than later. The surging car prices have had a direct effect on the cost of leasing.

Leasing is "not going to be quite the value that it was before,"said Charlie Chesbrough, Senior Economist at Cox Automotive. "Rising interest rates have driven auto manufacturers to reduce or even cancel incentives they used to provide," Chesbrough said.

Paul Daly, partner at UHY Hacker Young, noted: "Car leasing prices now look to be on the rise again. UK car leasees have benefited from a period of deep discounting, but that appears to be coming to an end."

"There are still some great discounts around and now is a good time for consumers to change their vehicles before prices rise further. But the days of leasing an Audi A3 at an incredibly low price appear to be over for now," he added.

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