Possible WTO/Brexit 10% tax implication

[Jodalo]

Welcome to the dark side GJ! We now have a Hymer Free 600S and are loving it. Hoping to see you on the Hymercar FB group soon!

Is this the beginning of the end? Nooooo!...

 

[GrannyJen]

I spotted one of those the other day.
Looks one of the better layouts. Like how the bed raises and you could fit a couple of bikes inside the centre of the van.

Precisely the purpose for which I am getting it

The only thing that would make me, temporarily I hope get rid of the Cali. With a caravan on tow I cannot use the tow ball rack and I do not like loading a caravan up with 50kg of bicycles, and I like even less the A-frame bike racks.

 

[Ch1pbutty]

I spotted one of those the other day.
Looks one of the better layouts. Like how the bed raises and you could fit a couple of bikes inside the centre of the van.

Would also save putting boards on the roof for local trips. (especially when its raining sideways in the winter!).

Alot of thought has gone into the layout as there is no need to shift things around to cook / sleep and still a reasonable amount of space given that it it also has toilet & shower. OK, its taller than a Cali but we always seem to have things on the roof that put us over the 2m height anyway. It would be perfect it had a tailgate rather then barn doors, as this would make a nice covered changing area.

...could be our next purchase, but we would keep the Beach & sell the car!

 

[BrendanJ]

The importer will be VW Commercial Vehicles UK, not your dealer, who will therefore be liable for the increased duty.

VWCV might well swallow any additional duty for the time being, then again they might not, and pass it to their customer (ie dealer).

Dealer might well swallow that additional duty, then again might not and pass it to their customer (ie you).

In the case that VW Commercial Vehicles are the importer and goods entered the Uk after 1sr Jan then I expect new duty rates would apply. It may well be the case subject to HMRC rules that they may make a concession based on goods title change being say “ex factory base” and simply in transit but VW commercial would have to claim that and indeed be aware of it, otherwise payment has to be made as usual. But in reality in this case this is rather small window of concession and given short distance in time from despatch to arrival at Uk port of entry ( a couple of days perhaps) then to apply goods would have to be despatched during / over Xmas period, so not so likely or very significant
Most likely scenarios are either clear despatch and arrival in uk before new year, or clear despatch and arrival after new year, in latter case duties being clearly applicable
In such case I expect VW commercial will according its commercial agreements with dealers will pass on the cost to dealer
On the other hand dealer may not be able to legally enforce on customer to take at new price and clearly would not want such arguments so likely will allow cancellation with no loss of deposit.
As has already been stated no skin off their nose as vehicle will sell even at higher price, to someone, remember all future vehicle imports will be at that price and unless market disappears completely then someone will buy, although for sure market for new vehicles will be badly affected and market reduce

ironically I guess that market for used vehicles, pre 2021 will now be seen as good ( even better) deal and even resale values may also go up as a result

but sad fact is the majority of sales will not be in that twilight zone over Xmas arrivals when unclear whether duty will be due or not.
But in such situation I would be clearly asking above questions to dealer and asking them to clarify through Vw commercial as arrangements and contracts may not be as we think.

 

[BrendanJ]

Remember, your average dealer / salesman will not have the foggiest idea how customs duties works, or even the details of commercial terms with very commercial uk or VW manufacturing, and I suspect will have difficulty getting clear answers to such questions
Clarify if you can cancel if duties applies, and if so go for it for now

 

[Jenny H]

Just rang VW Robinsons Norwich to arrange test drive - dont have California.
So rang VW Loughton - ones just arrived can test drive next week.
I asked re import tax - states they dont know either!
I asked re build time - Coast states 6 months!

 

[JAPRACER]

Import duty as someone pointed out above will be based on the price VW are charging VW for its own goods.
Surely it would just mean VW pricing it’s own goods at a renegotiated price with itself, hardly going to ruin its business overnight.
Also, VW will be selling for export outside of the EU so other procedures will apply to the goods too with regards taxes and levies, how do you think people in non EU countries buy them now (and buy them probably cheaper than we currently do)

 

[jbaedmonds]

Import duty as someone pointed out above will be based on the price VW are charging VW for its own goods.
Surely it would just mean VW pricing it’s own goods at a renegotiated price with itself, hardly going to ruin its business overnight.
Also, VW will be selling for export outside of the EU so other procedures will apply to the goods too with regards taxes and levies, how do you think people in non EU countries buy them now (and buy them probably cheaper than we currently do)

As someone in a non-EU country buying a California at lower than the UK price, there are two reasons for this:

1 - VAT here is lower - 7.7% vs 20% in the UK (this accounts for pretty much the entire difference)
2 - there is no import duty on new vehicles from the EU, as part of a bilateral trade agreement

If import duty is introduced at 10% for new vehicles entering the UK then VW can choose to absorb it by selling at the same price to the end customer and taking a hit on their margin. In the short term they might choose to do that to avoid having a load of unsold RHD stock they can't move to another market, but in the long term they won't. I expect there's VAT charged on the duty too, so it's a 12% increase in that case.

Vehicle makers allocate production to different markets based on demand and revenue potential. If they have to absorb a £6k import duty bill on every UK sold model then it becomes more profitable to transfer that allocation to another country, so the UK would be left with a smaller allocation at higher prices (basic economics would suggest at a higher price demand would be lower) and the remaining allocation will end up going to somewhere like Germany, Italy or wherever they can get the best price for it - even selling the incremental vehicles at an extra 5% discount would be more profitable than selling them in the UK.

In reality, I'd expect that on 'in demand' products the manufacturer will look to pass the duty on to customers with existing orders, on the basis that if the customer bails they'll be able to sell the car to someone else. I'd put any low volume and fairly high end stuff in this bracket and if I was a betting man I think the California would be treated this way. For volume metal they'll just need to shift it on and reduce future supply to demand.

Specifically for the UK the currency rate will make a big difference too, any no deal scenario will hit the GBP hard, making imports more expensive (GBP fell 2% yesterday) but to quantify this impact you're into currency hedging and that's way outside my area of expertise!

tl;dr prices will rise if there's import duty, if you've got a vehicle on order you could be asked to pay, it depends if the dealer or manufacturer thinks someone else will pay more for the vehicle you ordered if you choose not to pay the extra.

 

[soulstyledevon]

Would also save putting boards on the roof for local trips. (especially when its raining sideways in the winter!).

Alot of thought has gone into the layout as there is no need to shift things around to cook / sleep and still a reasonable amount of space given that it it also has toilet & shower. OK, its taller than a Cali but we always seem to have things on the roof that put us over the 2m height anyway. It would be perfect it had a tailgate rather then barn doors, as this would make a nice covered changing area.

...could be our next purchase, but we would keep the Beach & sell the car!

That’s exactly what we said...
Our van more often than not, is taller than 2m because my surfboards are on the top of the van. Unless I’m at the in-laws on the NE coast. Where they thrown over the back seats.
I had a nosey round one last week and was quite impressed.

 

[calibusje]

Import duty as someone pointed out above will be based on the price VW are charging VW for its own goods.
Surely it would just mean VW pricing it’s own goods at a renegotiated price with itself, hardly going to ruin its business overnight.
Also, VW will be selling for export outside of the EU so other procedures will apply to the goods too with regards taxes and levies, how do you think people in non EU countries buy them now (and buy them probably cheaper than we currently do)

Hellow
I doubt the vw california is sold cheaper outside the EU than here (if so, there are no or lower import taxes on these goods or agreements between EU and non-EU countries); as an example: in the USA they are not sold because the various taxes are too high and would make the california too expensive. I hope with you that Volkswagen will keep their prices on which the import tax is calculated low, but fear it ... they don't do it for such a large potenial market as the USA.
I hope everything goes well for you with the decisions your leaders make
Greetings

 

[jbaedmonds]

....... as an example: in the USA they are not sold because the various taxes are too high and would make the california too expensive......

Interesting (if you're a saddo) fact - Ford import the Transit Connect van from Turkey into the USA with rear windows and a bench seat in the back so it's classed as a passenger car. On arrival in the US the seats are removed and it's then sold as a van. This is because there's a 25% tax on imported vans but on cars the level is far lower, as a result of the 'Chicken Tax' - https://www.investopedia.com/terms/c/chicken-tax.asp

 

[calibusje]

Interesting (if you're a saddo) fact - Ford import the Transit Connect van from Turkey into the USA with rear windows and a bench seat in the back so it's classed as a passenger car. On arrival in the US the seats are removed and it's then sold as a van. This is because there's a 25% tax on imported vans but on cars the level is far lower, as a result of the 'Chicken Tax' - https://www.investopedia.com/terms/c/chicken-tax.asp

Hello
No, I'm no saddo. Indeed, I know the chickentax and ford get around it that way but volkswagen cannot do this for their californa.
I'm a customs officer at Zeebrugge in Belgium and I am very curious how it will turn out... I would rather have a deal with agreements but it is not up to me and I do not want to get involved with this hot topic unless for my job
Greetings

 

[jbaedmonds]

Hello
No, I'm no saddo. Indeed, I know the chickentax and ford get around it that way but volkswagen cannot do this for their californa.
I'm a customs officer at Zeebrugge in Belgium and I am very curious how it will turn out... I would rather have a deal with agreements but it is not up to me and I do not want to get involved with this hot topic unless for my job
Greetings

It will be really interesting to see how it turns out, I think this will turn into a case study in economics textbooks in future - imposing import tax on cars is probably one of the biggest levers the UK have in negotiations, but it's also one which will hurt them as much as the EU.

 

[Karlos]

Well if people start to reject orders after they have arrived due to the increase (if it happens) then VW will have to do something to shift that stock, could be a buyers market.

 

[WelshGas]

39 posts and lots of opinions but the baseline is Nobody Knows!
And no one has mentioned the Elephant in the Room.
Covid 19 and the effect that is having and will have on new vehicle manufacturing and sales, not to mention the 2nd hand market.

 

[jbaedmonds]

39 posts and lots of opinions but the baseline is Nobody Knows!
And no one has mentioned the Elephant in the Room.
Covid 19 and the effect that is having and will have on new vehicle manufacturing and sales, not to mention the 2nd hand market.

Well if we're specifically talking about the California, COVID has resulted in an increase in people buying them, and other similar vehicles. Also, as it's effectively a converted van, the demand for delivery vehicles has also increased across Europe, as more people shop online instead of going out.

For normal cars the story is a little different, but there has been an increase in demand for used cars (especially cheaper ones) from people who used public transport before but want to have their own means of getting around.

I think COVID specific stuff isn't going to have a substantial impact, but the recession it causes might do.

 

[calibusje]

It will be really interesting to see how it turns out, I think this will turn into a case study in economics textbooks in future - imposing import tax on cars is probably one of the biggest levers the UK have in negotiations, but it's also one which will hurt them as much as the EU.

correct, just a pity that the leader apparently strives for a no-deal as he wants to override parts of the Brexit divorce deal agreed last year.

And no one has mentioned the Elephant in the Room.
Covid 19 and the effect that is having and will have on new vehicle manufacturing and sales, not to mention the 2nd hand market.

hello WelshGas
Who or what is the elephant in the room? I'm terribly sorry for mentioning things other than covid19. I was confused as the title of this topic is 'possible wto / brexit 10% tax implication'.
I don't want to start a dispute and if you want, I'll take everything away.

Greetings

 

[Wogga]

Just remember the duty is on the goods, so the import duty is payable on factory gate price van assuming that is £40k that's a £4k uplift, on top of that is VAT payable on the goods and shipping. It would be poor if VWUK do a bit of profiteering and increase their margin %.

Looking at what is happening August orders appear to be landing Nov/early Dec, as long as it is dispatched before 23.59 31 Dec 20. It is in VWUK interests to get vans out to prevent buyers right to cancel.

PhilR I ordered 19th Aug and have a week 43 build date so you still have time, I am pretty sure VWUK will be banging on Hannovers door to prioritise

 

[PhilR]

Just remember the duty is on the goods, so the import duty is payable on factory gate price van assuming that is £40k that's a £4k uplift, on top of that is VAT payable on the goods and shipping. It would be poor if VWUK do a bit of profiteering and increase their margin %.

Looking at what is happening August orders appear to be landing Nov/early Dec, as long as it is dispatched before 23.59 31 Dec 20. It is in VWUK interests to get vans out to prevent buyers right to cancel.

PhilR I ordered 19th Aug and have a week 43 build date so you still have time, I am pretty sure VWUK will be banging on Hannovers door to prioritise

Just about to order, today!!! Hopefully...

 

[calibusje]

Just about to order, today!!! Hopefully...

Go for it! I wish you a good deal: great price and no hussle about import tax afterwards
Greetings

 

[WelshGas]

correct, just a pity that the leader apparently strives for a no-deal as he wants to override parts of the Brexit divorce deal agreed last year.

hello WelshGas
Who or what is the elephant in the room? I'm terribly sorry for mentioning things other than covid19. I was confused as the title of this topic is 'possible wto / brexit 10% tax implication'.
I don't want to start a dispute and if you want, I'll take everything away.

Greetings

The Elephant in the Room is Covid 19. A vehicle manufacturer has to have a market and that market has to buy. Yes sales have blossomed for Campervan etc but it won't be sustained. GDP will fall for every country, disposable income will fall, prices will fall, manufacturing costs will fall, 2nd hand markets will have a glut of vehicles and prices will fall. The manufacturer will have too options, keep the price and cut production or keep production and cut prices. Who knows what will happen. Something will.

 

[calibusje]

The Elephant in the Room is Covid 19. A vehicle manufacturer has to have a market and that market has to buy. Yes sales have blossomed for Campervan etc but it won't be sustained. GDP will fall for every country, disposable income will fall, prices will fall, manufacturing costs will fall, 2nd hand markets will have a glut of vehicles and prices will fall. The manufacturer will have too options, keep the price and cut production or keep production and cut prices. Who knows what will happen. Something will.

thank you for your answer, I thought it was something else and I said something wrong. I do not sense everything well in English as this is not my native language.
By the way, I'll go with your explanation. Something will happen and I'm curious what.
Greetings

 

[MrShaz]

Just about to order, today!!! Hopefully...

Awesome news....where are you ordering from in the end ?
Still not had a build date on mine confirmed yet.
Interestingly I did follow-up with Tom at Breeze on the stocked vans he mentioned yesterday...the quote he sent back for the highly spec'd 4 motion was an eye watering OTR of £78k (no discounts baked in from what I could see).

 

[Saesneg Shaun]

PhilR I ordered 19th Aug and have a week 43 build date so you still have time, I am pretty sure VWUK will be banging on Hannovers door to prioritise

I ordered 12th aug and also have a week 43 build date which i am told is end of October.

 

[Elmo3]

Awesome news....where are you ordering from in the end ?
Still not had a build date on mine confirmed yet.
Interestingly I did follow-up with Tom at Breeze on the stocked vans he mentioned yesterday...the quote he sent back for the highly spec'd 4 motion was an eye watering OTR of £78k (no discounts baked in from what I could see).

Crazy IMHO. Wait until the recession properly kicks in, a few distressed sales and prices will tumble.