The confirmation of a new UK-US tariff deal will have brought a collective sigh of relief from UK car manufacturers. But for motor dealers, especially SMEs involved in vehicle repair, the reality is more mixed and they must review their margin structure, says Michelle Malone, tax director at Xeinadin.
Yes, the cap on car export duties will help some of the bigger brands. However, the deal leaves steel and aluminium tariffs unresolved and that could have serious knock-on effects for parts, repairs and margins across the motor trade.
Who benefits and who doesn’t
Manufacturers exporting to the US are the clear winners here. Tariffs on up to 100,000 British-made cars annually are being reduced to 10%, a significant improvement on the 25% previously imposed. It gives brands like Jaguar Land Rover a bit more breathing room and may restart paused exports.
But dealers? Most UK dealerships don’t export cars to the US. Their concern isn’t with finished vehicle tariffs but with what this deal doesn’t fix, specifically, the unresolved steel and aluminium tariffs.
While a 50% hike remains on the table, UK officials are reportedly confident a deal will be struck to avoid this rise. That would hit every part of the supply chain from panel replacements to chassis components and could drive up repair costs at a time when margins are already tight.
Why steel and aluminium matter
If those raw material tariffs do increase, it’s not just body shops and repair garages that will feel the pinch. Dealers with service departments will face higher prices for everything from structural panels to minor fittings.
For customers, that could mean more expensive repairs and insurance premiums. For dealers, it may mean absorbing extra costs or passing them on, neither of which is an easy decision in the current climate.
What dealerships should do now
For SME dealerships, preparation is everything. Here are three things I’m advising clients to consider now.
Review your repair pricing strategy. If part and materials costs rise, will your current pricing model cover the difference? Look at service margins now, not later.
Talk to suppliers. Ask whether your key suppliers are hedging against raw material increases or if they plan to pass on cost changes directly.
And don’t forget your customers. If delays or price changes are likely, it’s better to have honest conversations early. It’s not always easy, but it does help to maintain trust.
This new tariff deal may be a headline win for exporters, but for dealerships on the ground, it feels like unfinished business.
The UK motor trade is already juggling economic pressures and regulatory shifts. Add tariff uncertainty into the mix, and it’s clear that resilience should be the focus over the coming weeks.
Dealerships don’t need to tackle this in isolation. In my role, I work closely with firms across the motor trade who are facing similar questions about costs, planning and resilience.
With the UK in final negotiations to avoid the July tariff hike, now’s the time to take stock, review the numbers and prepare for what may come next.
Author: Michelle Malone, tax director, Xeinadin.