While our thoughts are very much with the people of the Ukraine and our prayers are for their safety, we will all be affected by this conflict and need to consider what we can do while supporting the sanctions on Russia. The single biggest effect will be on the price of energy which has already jumped dramatically and is now certain to increase again if there is not a peaceful settlement. The sanctions placed on Russia by many countries throughout the rest of the world has already seen the price of oil rising towards $150 a barrel and the threat that average costs per home in the UK could reach £3000 a year. The price of a litre of petrol has reached record levels of over £1.50 and is likely to go higher.
While many private motorists can compensate in some way for this by making less and shorter journeys, the cost for business may have to be passed on. Although the 20% VAT can be recovered by businesses that are VAT registered, at some point, the additional cost will mean increased prices for the consumer.
There are calls for the Government to reduce the cost of duty on petrol and diesel to prevent this but the Chancellor has many challenges as the UK tries to grow the economy as we return to some kind of normal when all Covid restrictions disappear. The Government is also keen to see the growth in electric powered vehicles continue and the question will be will this be slowed down or speeded up. The difficulty in trying to speed up is the infrastructure is inadequate outside our large cities and while there is a plan to change this it will not happen overnight.
Russia is home to manufacturing hubs for brands like Stellantis (Peugeot, Citroen, DS, Vauxhall, Fiat, Abarth, Alfa Romeo, Jeep) , Volkswagen and Toyota. Some production has already been interrupted while shipping companies are halting activity to and from the country which is likely to have a further impact on the availability of new cars.
If you are concerned about the problems of changing your vehicle at the moment, the good news is that the value of your current vehicle is probably higher than you would expect and, in spite of the fact used car prices are at high levels, the price to change or the monthly payment for a more up-to-date vehicle may be attractive. You could also consider a hybrid which will give you more miles and save some costs on petrol or diesel, as well as make you more prepared for the change to electric in the future.
The Government will need to decide how they can keep heating bills at reasonable levels as well as keep sales of electric cars rising towards the 2030 objective. Challenging times.
Torbay Weekly Newsletter
Join the newsletter to receive the latest updates in your inbox.