UK motor trade 'witnessing improving conditions'
Commercial insurance
28th June 2010
Vehicle sales have continued to perform steadily in the UK, in spite of the end of the government's scrappage scheme
Incentives of up to £2,000 per vehicle were offered to purchasers of new models when they traded in a car that was ten years or more old under the cash for bangers initiative. It is widely credited with keeping sales of motors relatively high during the recession and there were fears that purchases would plummet, impacting upon production, once it came to an end in March.
Figures from the Society for Motor Manufacturers and Traders (SMMT) and Experian revealed sales of used cars fell only slightly in the first quarter of 2010, at 1,674,954, 7.7 per cent below the same period of 2009. This was despite a 27 per cent increase in the number of vehicles purchased over the same period.
This indicates that both second-hand and new motor traders are performing well in the UK, with production rising in May this year by 54 per cent, the seventh consecutive monthly increase. Meanwhile, output of commercial vehicles leapt by 129 per cent year-on-year during the period and engine manufacturing was 35.9 per cent higher than the same month of 2009.
However, the recent emergency Budget has brought in some changes that are likely to impact upon vehicle sales, with chancellor George Osborne announcing in his speech on June 22nd that VAT is rising from 17.5 per cent to 20 per cent from January 4th 2011. This could drive up sales in the short-term, but may affect the longer term outlook for the industry, while a reduction in corporate tax rates to 24 per cent in 2014 is likely to benefit many businesses in the future.
With conditions still fragile for those involved in UK vehicle sales, motor traders are advised by Giles Insurance Brokers Ltd. to assess their insurance requirements and ensure they have the right levels of cover to suit their needs at the best possible price.
The company's Group Managing Director, Sarah Lyons, advised: "Speaking to a specialist adviser can provide motor trade companies with peace of mind no matter what fluctuations take place over the coming months, as the UK continues to recover from the impact of the global financial crisis and the recession.
"Drivers are becoming increasingly concerned about green issues and this can affect their buying patterns, while the rise in VAT and tighter finances may alter the buying habits of some purchasers. To this end, it is important that motor traders are as well prepared as they can be for the next year and this includes purchasing policies that will cover all eventualities - from a decline in sales to the expansion of a business."
If comments made recently by the SMMT's media manager Jonathan Visscher are to be believed, the future could improve for the motor trade. He suggested a decision by the government to guarantee a pledged £20 million grant to Nissan will make Britain "an attractive location investment for international motor manufacturers", as the nation moves towards low carbon technology.
In this case, it is important for businesses to have flexible insurance policies in place to allow them to take advantage of altering conditions in the market, particularly those brought about by the growing awareness of climate change and the impact of driving on the environment.
