A rise to 20% VAT would be “a disaster” for the automotive industry
With the government’s scrappage incentive due to expire at the end of March UK car companies are predicting new vehicle sales to fall by as much as 10 per cent in 2010 to between 1.7 and 1.8 million.
As well as the end of the scrappage scheme there are other issues which may see sales dip even lower
with a rumoured rise in VAT to 20% being the biggest concern and bosses at the Geneva Motor Show were saying such a move would be “disastrous” for business.
While manufacturers and their dealer network will have to wait and see what the future holds, car chiefs are for the moment focusing on the end of the scrappage scheme and looking at other ways of boosting sales.
Some are to offer their own version of scrappage, offering big discounts or trade-ins on old vehicles – fast becoming known as “swappage”.
Kia managing director Michael Cole said: “We are still deciding what to do post scrappage but have made no firm decisions as yet. As far as VAT is concerned I think the market accepted a return to 17.5 per cent at the beginning of the year because it was what people had been previously used to.
“A move to 20 per cent would be potentially damaging. Car buyers are going to have to come to terms with that because it is going add quite a bit to the price of vehicles.”
The Motor Trade Insider Guide To Buying New Cars
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