VAT rise, cuts, double dips? Bring it on!

Despite the threat of a double dip recession, many of our sources are reporting unseasonably good showroom footfall and fairly strong demand. The rental companies are selling plenty of cars to the network and the auctions appear to be bustling with buyers. Of course this does not apply to everyone and I’m sure there will be many scratching their heads wondering why this does not apply to them in particular, however it could be that dealers are deciding to stock up early this year for the sales in December and January and avoid the stampede and price rises which normally occur at the start of the year.

Another reason cited for the sudden surge in used car activity is the continued struggle dealers have in simply obtaining new cars, as lead times become so long for some models there is no point even taking orders for them. As large car makers turn their attention to fast emerging markets like China and India, Europe and especially the right hand drive market here in the UK is clearly becoming the poor relation and this is having an effect on supply, which in turn maybe why buyers are turning to used alternatives.

The knock on effect is so extreme that if buyers do want a highly specced ex-demo or nearly new used car they will, in some cases, be paying well over the odds to buy one, as certain models become harder to source and demand outweighs supply.

The VAT increase will undoubtedly have an effect on buying behaviour and there is a genuine feeling in the trade that buyers are bringing purchasing decisions forward, although car dealers are masters at finding innovative ways of ensuring that the extra VAT burden does not fall on the customer.

Whatever happens between now and the end of the year it has certainly been a rollercoaster ride and the feeling inside the trade is let’s make the most of every opportunity and make hay while the sun still sort of shines.

No one can really predict the exact effect all the cuts will have on the automotive industry although you probably need look no further than the larger dealer groups and how they look to make cost savings in order to go through the next few years as lean as possible. Despite the recession the last 2 years has seen growth and profitability in the car sales sector and the tremendous resilience will surely continue.

In the words of many a top sports star ‘bring it on!’

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