London -- PSA Group has raised prices for its new cars in the UK after the pound plunged following the country’s decision to leave the EU.
Other automakers including Fiat and Nissan have warned that car prices will have to rise to counter the pound's fall but PSA is the first to do so,
PSA increased UK car prices for its Peugeot, Citroen and DS brands on 1 Aug.
A Peugeot brand spokesman said the increase partly reflected the pound’s 10 percent fall in value against the euro following the Brexit vote on June 23. “We have to anticipate fluctuations in currency,” he said.
Peugeot didn’t give an average increase but in one example the entry 308 compact car rose by 435 pounds ($567) to 15,930 pounds, a 2.8 percent increase.
Citroen and DS prices rose by an average of 2 percent, a spokesman for those brands said. The price increase was planned before the recent exchange rate fluctuations, the spokesman said.
PSA’s three brands have a combined 7.24 percent share of the UK market based on sales in the first seven months. The French automaker has no local production to offset currency variations and imports all its cars into the country.
UK industrywide passenger car registrations increased by just 0.1 percent in July with private sales declining by 6.1 percent as consumer confidence fell, according to data from industry association SMMT released on Thursday.
Price rises would “hurt car sales” in the UK, Europe’s second largest market after Germany, JATO Dynamics global analyst Felipe Munoz said.
Automakers are still assessing what the UK’s exit from Europe means for business there, he said. “However the first effect is on the pound, and the price rise is the easiest and quickest way to deal with that,” he said.
Renault-Nissan CEO Carlos Ghosn last week told journalists he had “no doubt” prices would have to rise in the UK.
Fiat brand's UK chief, Sebastiano Fedrigo, warned earlier this month that price rises are inevitable but said most companies are waiting to see if the pound stabilizes.
Automakers have warned that Brexit is hitting the profitability of their European operations.
Ford Motor, the UK's top-selling brand, said last month that Brexit has already cost the company $60 million because of the pound’s slump in value. It expects to lose $200 million this year and $400 to $500 million next year due to Brexit, Chief Financial Officer Bob Shanks said.
General Motors said it was considering cost cuts in Europe to offset up to $400 million of potential headwinds triggered by the Brexit vote. GM is seeking to return its Opel and Vauxhall to a full-year profit after years of losses.