End of scrappage scheme spells trouble for motor industry
The Society of Motor Manufacturers and
Traders’ (SMMT) statistics for new car registrations in the UK in
2009 show that nearly 2 million units were registered last
year.
This figure – 1,994,999 units – is the lowest since
1995, and represents a drop of 6.4 percent compared with 2008’s
result.
But SMMT chief executive Paul Everitt pointed out
the number of new cars registered in 2009 was still “significantly
above early expectations” – thanks, largely, to the government’s
scrappage scheme.
The number of new cars registered in December last
year clearly benefited from the scheme’s impact, the SMMT added,
along with a consumer rush to buy a new car before VAT rates rose
from 15 percent to 17.5 percent on 1 January.
December 2009 figures show that 38.9 percent more
new cars were registered than in the same month in 2008.
Everitt highlighted the importance of motor finance
to the motor trade in 2010.
“Sustaining the progress made in the latter part of
2009 will require stronger demand from fleet and business buyers,
alongside the greater availability and affordability of credit and
finance,” Everitt said.
Keith Parry, head of motor retail at Barclays, said
the scrappage scheme had been “a huge success”, accounting for
around 300,000 extra sales in 2009. But the reintroduction of the
17.5 percent VAT and the scrappage scheme’s predicted expiry date
of February 2010 spell potential trouble for the motor
sector, he warned.
“Dealers and manufacturers should now be working
together to avoid the sales slump by developing deals and offers
that take the place of the scheme and continue to incentivise price
conscious consumers,” Parry added.
“And consumers also need to recognise that by
shopping around and securing a good deal, it is possible to make
savings equivalent to the £2,000 scrappage discount.”
Business car registrations in 2009, meanwhile, were
lower than usual, and made up less than half of the total figure.
Business buyers could benefit from a “charm offensive” from
manufacturers desperate to shore up the fleet side of their sales
divisions, said the British Vehicle Rental and Leasing Association
(BVRLA).
The number of fleets which put off replacing older
models in 2009, and instead extended contracts, could also help
business registrations rebound in 2010, said BVRLA chief executive
John Lewis.
“With an economic recovery underway and firms
beginning to recruit again, we expect fleet car sales to pass the
million mark in 2010, providing a vital shot in the arm for
manufacturers,” Lewis added.
“Any rebound in business sales will be especially
welcome as these vehicles tend to be higher-spec, more executive
models that are more profitable for manufacturers,” the BVRLA
noted.
Jo Tacon