New car sales in the UK are expected to drop to around 1.8 million units in 2010, a drop from 1.95m this year.
The government-backed scrappage incentive scheme is scheduled to run out in February and the Society of Motor Manufacturers and Traders (SMMT) chief executive Paul Everitt predicts this will have a major impact on the UK’s new car sales next year.
“We’re about to enter a very uncertain period for the UK car industry,” Everitt told Autocar. “The truth is we just don’t know what’s going happen after scrappage. Our 1.8m units prediction is a conservative one, but there are a lot of factors which could help push sales above or below this.”
Everitt believes the main benefactors from the scrappage scheme are those who wouldn’t have normally bought a new car.
“Those who normally buy new cars have generally been staying away from showrooms over fears of job security and strains on their income,” he said.
“They don’t have a 10-year-old car to scrap and that’s meant the sales have come from a new type of customer, one who hasn’t necessarily bought a new car before.”
Fleet sales have been consistently down around 25 per cent this year and Everitt said there is pent-up demand in this market waiting to be released.
“Fleet operators have decided to keep hold of their cars for an extra year, but they can’t keep on holding onto them,” he said. “The market confidence is slowly coming back and I expect to see sales rise in the fleet sector soon.”
The imminent VAT rise of 1 January is likely to lead to an increase in sales towards the end of this year, while Everitt also warned that whoever wins next year’s election will almost certainly raise taxes.
“We just hope that any tax rises don’t apply to the car industry,” said Everitt. “Ideally next year we’d like to see some help for the fleet and commercial sectors and more incentives to get people back in showrooms.”