Huge challenges lie ahead in the coming months for the UK automotive industry despite latest new car sales figures showing a 31.6% rise in registrations last month.
David Raistrick, UK manufacturing leader at Deloitte said that while the sales figures were 'wonderful news' for the automotive sector and proved that the scrappage scheme had met expectations in terms of stimulating demand for new cars a 'perfect storm' was brewing on the horizon.
This will see the automotive sector affected by a combination of factors that could come into play in the first quarter of next year.
He said: "Within a short period of time we will see the scrappage scheme end and the VAT rate return to 17.5%. Meanwhile the government's proposed showroom tax of £950 per vehicle could be implemented in March and interest rates may also increase in this period. Furthermore, car manufacturers may find themselves needing to implement price rises due to the low value of sterling increasing the cost of imported cars and parts.
"At a time when the industry is showing promising signs of recovery, it is important the sector does not lose sight of the challenges ahead in 2010."
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