Every week Askaprice.com takes a look at the state of the car industry and how it’s affecting both car buyers and car retailers. We asked the Askaprice.com expert to discuss predictions from the Society of Motor Manufacturers and Traders (SMMT) and AM-Online that end-of-year sales would improve, with consumers looking to beat next year’s rise in VAT.
So far the predicted up-turn in sales has yet to happen and it is increasingly unlikely that the market will stage any form of recovery in 2010.We are experiencing freak weather conditions this winter and that has had an effect on sales as a whole.Consumers will first of all find it difficult to get to dealerships because of road conditions – and the desire to own a new car diminishes in bad weather.People are reluctant to test drive and buy a new car when it will initially be driven in difficult conditions; drivers would rather prang an old car than a brand-new one.The sales resurrection has also been predicted for the run up to Christmas and in December. It’s a period where sales are traditionally slow as people look to save on big expenses.Similarly, consumers aren’t panicking about the VAT hike. Instead they seem to expect manufacturers to absorb the price hike in order to maintain decent sales.This has already been seen with manufacturers like Land Rover and BMW, who are ignoring the rise and retaining the 17.5 per cent VAT rate as a marketing ploy.In a buyer’s market it is dealers who have to force the issue – so the new VAT will be negotiable in the majority of cases.December – particularly this year in light of the adverse weather conditions – is one of the best times to buy a car, as desperation breeds discount.Dealerships are stocked to the eyeballs because it is the quietest quarter of the year in terms of sales and when that is combined with a lack of customers because of the weather, discounts are there to be had.Dealers will be fearful of residual values dropping from their current stock come the end of the year and when customers reach a forecourt they should be in for a pleasant surprise.